1. No category

ANNUAL REPORT 2014
STRIVING TODAY
FOR THE STRENGTH
OF TOMORROW
Mission
and
Vision
Our vision is to become a key
player in the global marine and
offshore industry. We strive to provide
innovative and integrated solutions
optimised for our customers’ needs
along the entire marine business value
chain, including shipbuilding project
management and consultancy
services, design and engineering,
shipbuilding (outsourced), ship
trading related businesses and EPC
services value chain.
CONTENTS
corporate profile
Corporate Profile ................................................................03
AVIC International Maritime Holdings Limited (“AVIC Maritime”) (中航国际船
舶控股有限公司), together with its subsidiaries, (the “Group”) , is a member
of the Aviation Industry Corporation of China (“AVIC”) (中国航空工业集团公
司) group of companies (the “AVIC Group”).
Our Business and Strategy ................................................04
Chairman’s Message (English) ...........................................06
Chairman’s Message (Chinese) ..........................................08
Corporate Structure ...........................................................12
Key Highlights in FY2014 ..................................................13
Operational and Financial Review ....................................14
Board of Directors ..............................................................20
Key Management ...............................................................25
Corporate and Social Responsibility .................................26
Corporate Information ......................................................28
Financial Contents ..............................................................29
A
s an active player in the marine and offshore
industry, AVIC Maritime strives to provide innovative
and integrated solutions optimised to meet
customers’ needs along the entire marine business
value chain. Our extensive range of services includes
shipbuilding project management and consultancy
(“M&C Services”), design and engineering, shipbuilding
(outsourced), ship trading related businesses, as well as
engineering, procurement and construction services
(“EPC Services”).
industrial groups authorised and managed by
the People’s Republic of China (“PRC”) Central
Government, with key business units such as defence,
transport aircraft, aviation engine, helicopters, avionics,
general aviation aircraft, aviation research and
development, flight test, trade and logistics, and
asset management. AVIC Maritime’s association with
the AVIC Group gives us the competitive edge of
getting strong support from major financial institutions
in the PRC.
AVIC Maritime’s track record in M&C Services dates
back to 1994 and has over the years, established
strong relationships with many reputable ship-owners
worldwide. Forging ahead with our strategy to expand
along the ship design, shipbuilding and ship trading
related businesses value chain, the Group acquired
a Finnish design and engineering firm, Deltamarin
Ltd. (“Deltamarin”), in January 2013, to enhance
our ship design capability. Established since 1990,
Deltamarin is a forerunner in naval architecture
and engineering, and an experienced developer
of profitable, sustainable and cost-efficient vessels.
In 2014, AVIC Maritime established a joint-venture
company with Deltamarin, Delta-AVIC Pte. Ltd.,1 to
provide EPC services.
Led by an experienced and driven management team
with in-depth industry knowledge, coupled with our
ability to leverage on AVIC Group’s excellent business
relationships, strong fundamentals and global business
network, AVIC Maritime is well-positioned to become a
key player in the global marine and offshore industry.
Ranked 178th among Fortune Global Top 500
corporations in 20142, the Aviation Industry Corporation
of China Group (“AVIC Group”) is one of the largest
2
AVIC International Maritime Holdings Limited
AVIC Maritime was ranked No. 84 out of the 644
companies in the Governance and Transparency Index
(“GTI”) 20143, marking a significant improvement from
the 396th place in 2013. The study was conducted by
the NUS Business School’s Centre for Governance,
Institutions and Organisations (“CGIO”) and The
Business Times, and is supported by the Investment
Management Association of Singapore, the Singapore
Business Federation and the Singapore Accountancy
Commission.
1
Effective from 27 March 2015, Delta-AVIC Pte. Ltd. has changed its name to Deltamarin Floating Construction Pte. Ltd.
2
http://fortune.com/global500/aviation-industry-corp-of-china-178/
3
http://bschool.nus.edu/Portals/0/docs/GTI-2014-Index-Website-Ranking-Order.pdf
Annual Report 2014
3
Our Business And Strategy
our vision
Our Business
SHIPBUILDING
PROJECT M&C SERVICES
•Services include ship design,
construction (outsourced),
procurement, newbuilding
management and marine
finance arrangement
•Providing design and
engineering services through
Deltamarin and other leading
design institutes in China
•Providing marketing and
consultancy services to
shipyards such as promoting
their corporate profile in
overseas markets, seeking
out ship-owners and securing
shipbuilding contracts
SHIP TRADING
• Our Group’s indirect
major shareholder, AVIC
International Holding
Corporation, through its
subsidiaries, owns substantial
stakes in two shipyards in
the Shandong and Jiangsu
provinces in China
•With a strong track record
of more than 20 years,
Deltamarin provides one-stop
expert services throughout the
entire life cycle of a marine
and offshore structure
• The two shipyards are
capable of producing a wide
variety of vessels and marinerelated products
• Our Group also works with
other established and
reputable shipyards around
the world
,
G ND
IN
ER NT A N
E
E IO
IN
G EM CT
EN UR TRU
C S
O N
PR CO
G
ING
AD
P TR
DESIGN &
ENGINEERING
AVIC International Maritime Holdings Limited
Provide greater
variety of
financing
arrangements
and valueadded services
•Focus on governmental ship
and relevant engineering
projects in developing
countries
•Work with shipyards to
organize, negotiate and sign
the subcontract of projects
•Provide services in financing,
monitoring, coordination,
customer service, on-site
support, purchasing of giant
facilities, problem solving and
relevant trade operation in
the project process, as well as
after-sales service
•Leveraging on the strong
partnerships with excellent
domestic and overseas
shipyards and suppliers
4
To become a key player in the
global marine and offshore
industry
Strengthen
shipbuilding
and
supply-chain
management
capabilities
Our long-term strategy is to
develop our existing shipbuilding
project management and
consultancy business, as
well as expand our scope of
capabilities along the ship-design,
shipbuilding, ship trading related
businesses, and EPC services
value chain
Enhance
research
and
development
capabilities
ENGINEERING,
PROCUREMENT AND
CONSTRUCTION
UILDIN
Our Business
•Its wide range of services
includes concept
development, offshore
engineering, construction
engineering for shipbuilding
and operation support
•It excels in cost efficient ecodesigns
SH
PR IPBU
OJ
ILD
SE ECT ING
RV
M
IC &C
ES
SHI
•Leveraging on our Group’s
strengths and in-depth
product knowledge, we are
able to provide specialist
technical support efficiently
and our strong network allows
us to source for competitivelypriced quality products from
around the world
DESIGN & ENGINEERING
SHIPB
•Offer an integrated
procurement service which
extends from market analysis
to acquisition of goods and
delivery to the door
SHIPBUILDING
our strategy
A key player
in the global
marine &
offshore
industry
Expand global
reach and build
overseas
network
Develop more
sophisticated
and
higher valueadded vessels
Annual Report 2014
5
CHAIRMAN’S MESSAGE
Dear Shareholders,
In 2014, the rate of global economic recovery remains
moderate, while the Chinese economy has entered a “new
normal”. Demand within the shipping industry remains weak due
to the continued depressed commodity prices, with oil prices in
particular taking a beating. Faced with the challenging external
environment, AVIC International Maritime Holdings Limited (the
“Company”, and together with its subsidiaries, the “Group”)
explored methods of maximising internal potential and overall
synergy within the Group, focusing on areas such as supply
chain management, technical support, capital operations
and operations management. Through our persistent efforts,
the Group managed to have a fruitful year, and the results
for FY2014 continue to show improvement and reflect a good
growing momentum.
Financial results review
For FY2014, the Group reported a total revenue of RMB455 million
from its various business segments. Our ship design segment was
the biggest revenue contributor with a revenue of RMB242.8
million, accounting for approximately 53% of the Group’s total
revenue. Another major contributor was our new EPC segment
which reported RMB78.2 million in revenue, accounting for 17%
of the Group’s total revenue, and emerging as a new growth
segment. Net profit of the Group increased 189% year-on-year,
climbing to RMB17.2 million. We believe that our stable profit
growth will help to lay a solid foundation for more sustainable
development in the long-term. In order to increase our
competitive advantage amidst the industry downturn, the Group
is focusing on expanding its ship design and EPC businesses.
While ship design segment continued
contributing over 50% of the total revenue,
EPC business has enhanced our revenue
stream too. Our business portfolio has been
further diversified, and has started
to produce synergy.
The Group’s core competitive strength is effectively
complemented by the acquisition of Deltamarin Ltd
(“Deltamarin”) in 2013. This year, Deltamarin participated
in the design of the world’s first LNG-powered icebreaker,
demonstrating its ability to continuously innovate. In order to
combine the European ship design competitive advantages with
the Chinese shipbuilding experience, the Group strengthened
the capabilities of the Chinese ship design team. Meanwhile,
continuing demand from the Chinese market and its potential
for growth will encourage further collaborative development
between Deltamarin and the Group’s other related business
segments.
Mindful of the immense potential in the future marine
engineering market, the Group plans to increase investments in
its EPC segment. To improve overall strength in this field, we are
leveraging on our accumulated experience and competitive
edge in design and engineering, global marketing network,
experience in project management and financing ability. This
segment will be our next growth opportunity, achieving new
breakthroughs for the Group’s long-term sustainability and
development.
AVIC International Maritime Holdings Limited
7
In 2014, the Group launched a series
of business integrations to optimise the
allocation of resources across our intergroup shipbuilding value chain. We hope to
see a healthy integration in many aspects
including market development, supplychain management, and technology
upgrading. Through these, we will be able to
maximise synergies and gain a competitive
edge in the international market.
Business Outlook and Prospects
In 2015, as the global economy embarks
on its slow recovery, the imbalance
between demand and supply in the
global shipping industry continues to be
prolonged. In order to encourage the
development of large-scale shipbuilding
enterprises, the Chinese government has
released various stimulus and policies
to promote industry consolidation. In
addition, we believe that the falling crude
oil prices will bring about new business
opportunities as we expect an increase
in international consumption, as well as
imports and exports.
In the coming year, amidst challenges
and opportunities, the Group will
continue to focus on improving its design
capabilities and project management
skills, establishing core products, and
cultivating a core customer group. We
hope to propel more stable business
development through a series of effective
measures, including improving internal
governance and risk management.
Appreciation
On behalf of the Board, I would also like
to express my deepest appreciation to
the management team and employees
for their dedication and commitment
to the Group. We are thankful to our
business partners and customers for your
unwavering support, and I look forward
to a closer collaboration and partnership
with you. To our valued shareholders, we
are thankful for your unrelenting support
and confidence in us as we strive to
develop the Group into becoming the
top integrated service provider brand for
Chinese commercial vessels.
Dr Diao Weicheng
Executive Chairman
1
6
Annual Report 2014
Reuters – “Shipping industry sees an end to five-year downturn”, 7 February 2014 https://www.bimco.org/Reports/Market_Analysis/2014/0108_Reflections.aspx
Annual Report 2014
7
尊敬的各位股东:
2014年全球经济依然复苏乏力，中国经
济增长进入“新常态”。大宗商品特别
是石油价格持续走低，航运市场需求仍
务板块；新增的EPC业务为集团创造营
基于未来海工市场的巨大潜力，集团增
费与进出口量都有望增加，将为航运市
业收入7820万人民币，占集团营业收入
加了对EPC业务的投入，发挥长期积累
场带来契机。在挑战与机遇并存的非常
总额的17%，成为新的经济增长点。集
的设计开发优势、市场营销网络、项目
时期，集团将在新的一年以提升设计能
团实现税后净利润1720万人民币，较去
管理经验和融资能力，增强承接EPC业
力、打造核心产品、加强项目管理、培
年增长189%，稳定的盈利增长为集团的
务的整体实力，形成了新的业务增长
育支柱客户为战略主题，进一步完善内
可持续发展奠定了坚实的基础。
点，为集团业务的长远均衡发展实现了
部管理，控制经营风险，并通过一系列
新的突破。
有效举措，助推公司的稳健发展。
旧低迷。面对形势严峻的外部环境，中
为应对市场压力，突出差异化竞争优
航国际船舶控股有限公司（以下简称：
势，集团采取着重发展船舶设计业务，
集团在2014年还推出了一系列相关业
感谢辞
集团或公司）大力开发市场，致力在供
并积极开拓EPC业务的经营决策。
务整合措施，以促进船舶产业链各环节
我谨代表董事会，向管理团队和全体员
应链管理、技术支持、资金运作和运营
管理等方面挖掘内部潜力，发挥集团整
体协同优势，取得可喜成绩。 通过不懈
努力，2014年公司业绩持续增长，呈现
良好发展态势。
业绩回顾
继2013年完成对Deltamarin的收购后，
集团在国际船舶领域的核心竞争力显著
提升。今年Deltamarin参与设计了全世
界第一艘LNG破冰船，彰显其持续创新
之间的资源共享，实现在市场开发、供
应链管理、技术提升等各方面的有机结
合，以充分发挥协同效应，提升国际市
场竞争力。
能力。为使欧洲船舶设计优势资源和中
前景与展望
国本土造船经验相结合，集团加强了中
2015年，世界经济缓慢复苏，全球航
2014财政年度，集团总营业收入达到
国船舶设计团队的建设，以满足中国本
4.55亿元人民币。其中，船舶设计业务
土市场需求，挖掘中国市场潜力，促进
实现营业收入2亿4280万人民币，占集
Deltamarin与集团其他相关业务的协同
团总营业额的53%，仍为贡献最大的业
发展。
运市场供求失衡态势还将延续。中国政
工一直以来为集团所做的贡献表示最诚
挚的谢意。也感谢商业伙伴和客户对我
们坚定不移的支持，希望我们的合作关
系日益密切。最后，感谢各位股东对集
团一贯的信任和支持，在您的关注和支
持下，我们将不遗余力地把集团打造成
中国商用船舶集成供应服务第一品牌。
府将通过多种政策手段推动造船行业
整合，鼓励大型造船企业的发展壮大。
此外，原油价格持续下跌，国际市场消
刁伟程博士
执行主席
8
AVIC International Maritime Holdings Limited
Annual Report 2014
9
CONSOLIDATING
OUR RESOURCES WITH PRUDENT
COST MANAGEMENT ENSURES
SEAMLESS SYNERGY TOWARDS
A COMMON GOAL TO SUSTAIN
LONG TERM GROWTH
10
AVIC International Maritime Holdings Limited
Annual Report 2014
11
Corporate Structure
100%
Key Highlights in FY2014
100%
AVIC International
Ship Engineering
Pte. Ltd.
TOTAL EQUITY
100%
AVIC International
Ship Development
Pte. Ltd.
242.3
Kaixin Industrial
Pte. Ltd.
RMB million
79.57%
AVIC International
Marine Engineering
Pte. Ltd.
100%
REVENUE
41.37%
AVIC International
Offshore Pte. Ltd.
455.1
50.22%
8.41%
AVIC International
Ship Development
(China) Co., Ltd.
AVIC Ship
Investment Limited
65%
100%
100%
AVIC Tidestar Fast
Offshore Pte. Ltd.
AVIC International
Marine Engineering
(Lux), S.à.r.l.
RMB million
100%
100%
AVIC International
Offshore (Xiamen)
Co., Ltd.
100%
AVIC International
Ship Development
(Guangzhou)
Co., Ltd.
NET PROFIT
17.2
100%
RMB million
AVIC Kaixin
(Beijing) Ship
Industry Co., Ltd.
CASH AND
CASH
EQUIVALENTS
208.8
100%
Deltamarin Ltd.
100%
Deltamarin Brasil
Consultoria e
projectos Ltda
100%
Deltamarin Floating
Construction Ltd.
100%
Deltamarin
(China) Co., Ltd.
100%
RMB million
Deltamarin
Sp.z o.o.
NET ASSET VALUE
PER SHARE
67.3
RMB cents
55.56%
DeltaLangh Ltd.
0.01%
Elomatic Oy
49%
GPS Deltamarin
(M) SDN. BHD.
12
AVIC International Maritime Holdings Limited
9.8%
Offshore
Technology
Center Oy
50%
Shandong
Deltamarin Marine
Engineering Co., Ltd
50%
Brodoplan d.o.o.
49%
Deltamarin Floating
Construction Pte.
Ltd.
51%
Annual Report 2014
13
Operational & Financial Review
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group
Financial Summary
FY2014
FY2014
FY2013
For the year (RMB’million)
Revenue
601.3
Profit Before Income Tax
24.2
21.2
Profit for the year
17.2
6.0
Current Assets
602.0
574.3
Non-Current Assets
216.6
226.3
Total Assets
818.6
800.6
Current Liabilities
321.5
221.6
Non-Current Liabilities
254.8
336.5
Total Liabilities
576.3
558.1
Total Equity
242.3
242.5
Cash and Cash Equivalents
208.8
403.2
5.06
0.74
67.28
65.84
Current Ratio2 (times)
1.9
2.6
Return on Shareholders’ Equity3 (%)
7.1
2.5
Return on Assets (%)
2.1
0.7
Net Asset Value Per Share1
Note:
601,306
(24.3)
(289,205)
(403,027)
(28.2)
165,853
198,279
(16.4)
25,104
4,264
488.7
Marketing and
distribution
expenses
(29,359)
(27,061)
8.5
Administrative
expenses
(120,527)
(112,819)
6.8
Finance costs
(15,951)
(13,304)
19.9
Other operating
expenses
(528)
(25,975)
(98.0)
Share of results of
associates
(378)
(2,173)
(82.6)
Profit before
income tax
24,214
21,211
14.2
Income tax
expense
(7,018)
(15,258)
(54.0)
Profit for the year
17,196
5,953
188.9
Other operating
income
Service fee income
Management service fee
Shipbuilding revenue
Ship-design fee income
Other income
Service fee income
Management service fee
Shipbuilding revenue
Ship-design fee income
EPC revenue
Key Ratios
4
455,058
Gross profit
Per Share Information (RMB cents)
Basic Earnings Per Share1
(%)
Cost of sales
At year end (RMB’million)
Cost of sales
Cost of sales declined 28% to
RMB289.21 million and it is partially
due to the adjustment in shipbuilding
cost. This led to an improvement in
gross profit margin from 33% for FY2013
to 36% for FY2014.
1) Based on 285,578,000 weighted average number of ordinary shares. 2) Defined as current assets/current liabilities
3) Defined as profit for the year/total equity
4) Defined as profit for the year/total assets
Other operating income
Revenue
The Group’s revenue for financial year ended 31 December 2014 (“FY2014”) decreased 24% to RMB 455.1 million. The
Group’s geographical revenue was mainly derived from Asia, Europe and America. For the year under review, services fee
income and management services fee were derived from Asia, while shipbuilding revenue was from the Middle East and
South Asia. Ship design fee income was mainly derived from Europe and Asia, with contributions from North America, South
America, Africa and Australia.
Revenue by type of services (RMB’ million )
Service fee income
FY2014
FY2013
25.0
32.1
Management service fee
17.9
26.0
Shipbuilding revenue
90.9
235.2
242.8
288.4
EPC revenue
78.2
-
Other income
0.3
19.6
455.1
601.3
Ship-design fee income
Total
14
AVIC International Maritime Holdings Limited
Asia
Europe
America
Middle East
Australia
Other operating income increased to
RMB 25.1 million for FY2014, mainly due
to realised foreign exchange gains
arising from the repayment of a longterm loan denominated in Euro, as
compared to a loss for FY2013.
Marketing and distribution expenses
Marketing and distribution expenses
increased 8% to RMB29.36 million,
of which, operating lease expenses
increased by approximately 44% to
RMB3.01 million for FY2014.
Administrative expenses
Asia
Europe
America
Change
(RMB’000)
Revenue
455.1
FY2013
(RMB’000)
Administrative expenses increased 7%
largely due to increase in employee
benefits, amortisation expenses, and
general office expenses. Amortisation
expenses increased by 51% to RMB5.62
million for FY2014.
Other operating expenses
Other operating expenses decreased
98% to RMB0.53 million for FY2014
mainly due to foreign exchange
gains arising from the long-term Euro
loan and from bank balances of
China subsidiaries denominated in
USD. Foreign exchange losses were
the main contributor to the other
operating expenses of RMB25.98 million
for FY2013.
Finance costs
For FY2014, finance costs increased
20% to RMB16.0 million due to interest
expenses incurred on additional
loans raised.
Share of results of associates
In FY2014, the Group recorded a 83%
decrease in the share of loss from
associates to RMB0.38 million. This was
mainly because of the dissolution of
a loss-making company.
Income tax expense
Income tax expense decreased 54%
to RMB7.02 million in FY2014 mainly
due to a reversal in deferred income
tax expenses due to the reduction
of the Finnish corporate income tax
rate from 25% to 20%.
Annual Report 2014
15
Operational & Financial Review
Current assets
The Group’s cash and cash equivalents decreased
48% to RMB208.8 million as more cash was deployed
to finance working capital requirements. Meanwhile,
pledged bank deposit increased 87% to RMB92.48 million
due to increase in banking facilities as a result of growth
in business activities.
Trade receivables increased RMB111.83 million to
RMB220.92 million due to (1) contributions from the
marine EPC business which commenced in 3Q2014, and
(2) a RMB59.79 million advance payment made in favour
of a shipyard pursuant to a shipbuilding construction
contract in accordance with the payment terms in the
shipbuilding sub-contract entered into with the shipyard.
Other receivables increased RMB67 million due to
(1) RMB8 million increased in prepayments for vessels
under construction at shipyards, (2) value added tax
reimbursements amounting to RMB40 million receivable
for export of vessels which had been delivered to the ship
owner, and (3) RMB3.6 million in PRC Customs deposit.
Non-current assets
Plant and equipment increased RMB0.5 million mainly
due to the purchase of office equipment and the
financial lease arising from Deltamarin Group’s office
relocation. Intangible assets increased RMB2.22 million
due to the addition of a technology patent in Deltamarin
Group. The Group’s goodwill showed a RMB11.69 million
decrease to RMB109.2 million due to the depreciation of
the Euro which had an impact on the translation of the
goodwill denominated in Euro to RMB.
Current liabilities
Trade payables increased RMB19.66 million to RMB49.9
million mainly due to growth in business. Other payables
and accruals increased to RMB 85.2 million mainly due
to payables to AVIC Weihai and accrued operating and
office expenses during the financial period.
Current portion of long term loans increased to RMB136.0
million due to the additional term loan repayable within
one year. Short term loan of RMB9.3 million arises from a
revolving credit facility arrangement with OCBC Bank for
a limit of SGD17.9 million. In January 2014, the Group had
drawn down SGD2.0 million to be rolled every 3 months.
The income tax payable decreased by RMB5.46 million to
RMB1.4 million mainly due to the decrease in income tax
expenses incurred in FY2014 as well as the settlement of
the income tax payable outstanding balance.
Non-current liabilities
The Group obtained a three-year loan amounting to
SGD45 million from BOC Bank to refinance the acquisition
of Deltamarin Ltd. The principal of loan amount is due
to be repaid in three years from the date of the loan
drawdown. The loan carries a floating interest rate of 2%
per annum over SIBOR.
Deferred tax liabilities represented the tax liabilities for
the timing differences arising from the recognition of
the intangible assets, ship-design fee income and fair
valuation of the Deltamarin Group’s assets. Other noncurrent liabilities represented the outstanding amount of
technology patent which are repayable in three years.
Capital and reserve
The capital and reserve of the Group amounted to
RMB192.1 million, comprising mainly of share capital,
accumulated profits, statutory reserve and deemed
contribution from the immediate holding a company as
a result of initial recognition of shareholder’s loan at fair
value.
16
AVIC International Maritime Holdings Limited
Net cash from operating activities
STATEMENT OF FINANCIAL POSITION
Group
31 Dec 2014
(RMB’000)
31 Dec 2013
(RMB’000)
208,763
403,234
92,475
49,540
Trade receivables
220,917
109,087
Other receivables
79,391
12,399
481
-
8,094
7,594
405
1,060
49
55
98,381
96,164
109,203
120,891
497
557
818,656
800,581
9,289
-
136,030
66,990
Trade payables
49,905
30,243
Advance received
38,744
39,103
Other payables and
accruals
85,201
77,351
967
1,018
1,377
6,836
Finance leases
806
838
Long-term loan
228,239
309,552
22,039
26,127
3,735
-
576,332
558,058
101,237
101,237
Capital reserve
12,470
12,470
Statutory reserve
11,988
10,209
Translation reserve
10,914
21,231
Non-controlling interest
50,185
54,508
Accumulated profits
55,530
42,868
242,324
242,523
Current assets
Cash and cash
equivalents
Pledged cash placed
with bank
Inventory
Non-current assets
Plant and equipment
Investment in associates
Available-for-sale
investments
Intangible assets
Goodwill
Deferred tax assets
Total assets
CONSOLIDATED CASH FLOW STATEMENTS
Group
Cash outflow used in operating activities amounted
to RMB151.54 million compared to cash inflow
of RMB37.21 million in FY2013 mainly due to the
increase in receivables.
Net cash from investing activities
Cash outflow used in investing activities amounted
to RMB16.04 million due to intangible assets and
property, plant and equipment acquired by
Deltamarin.
Net cash from financing activities
Net cash used in financing activities amounted to
RMB28.42 million, compared to RMB26.36 million in
the previous year, due to the repayment of loan
and repayment of finance lease, which is offset by
the new bank loan raised.
FY2014
(RMB’000)
FY2013
(RMB’000)
Net cash (used in)/
generated from
operating activities
(151,537)
37,214
Net cash (used in)/
generated from
investing activities
(16,040)
39,558
Net cash used in
financing activities
(28,421)
(26,362)
Net (decrease)/increase
in cash and cash
equivalents
(195,998)
50,410
Cash and cash
equivalents at end of
the Year
208,763
403,234
Current liabilities
Short-term loan
Current portion of longterm loan
Current portion of
finance lease
Income tax payable
Non - current liabilities
Deferred tax liabilities
Other payables
Total liabilities
Capital and reserves
Share capital
Total equity
Annual Report 2014
17
PROPELLING
THROUGH THE WAVES AND
BREAKING NEW BOUNDARIES OF
OPERATIONAL EXPANSION FOR A
BRIGHTER FUTURE
18
AVIC International Maritime Holdings Limited
Annual Report 2014
19
board of directors
Mr Li Meijin (李美进) is our Executive Director in charge of the Group’s
administrative and operational matters. Mr Li was first appointed to our
Board on 31 March 2014 and he was most recently re-elected to our
Board on 29 April 2014.
Dr Diao Weicheng (刁伟程) is our Executive Chairman. He was first
appointed to our Board on 11 November 2010 and was re-designated
from Non-Executive Chairman to Executive Chairman on 2 April 2012.
From 20 June 2012 to 17 January 2014, he was appointed as Interim
Chief Executive Officer (“CEO”) of the Company before a new CEO was
appointed. Dr Diao was last re-elected to our Board on 25 April 2013.
Since 1 March 2012, Dr Diao has been the Vice President of AVIC
International Holding Corporation (“AVIC INT’L”), where he takes the lead
responsibility in the ship and logistics related business within AVIC INT’L. He
was previously appointed as the Non-Executive Chairman of the boards
of the following companies within AVIC INT’L – AVIC International Beijing
Co., Ltd. (“AVIC INT’L Beijing”), AVIC International Guangzhou Co., Ltd.,
Dr Diao Weicheng
AVIC International Xiamen Co., Ltd., AVIC International Shanghai Co., Ltd,
Executive Chairman
AVIC International Kairong Limited and AVIC International Engineering
Corporation Ltd. Currently, Dr Diao sits on the board of Kaixin Industrial Pte. Ltd., AVIC Kaixin (Beijing) Ship Industry Co.,
Ltd., AVIC International Ship Development Pte. Ltd., AVIC International Ship Engineering Pte.Ltd., AVIC International Marine
Engineering Pte. Ltd., AVIC International Marine Engineering (Lux), S.àr.l and AVIC Weihai Shipyard Co., Ltd.. He was also
appointed as director of Rainbow Department Store Co., Ltd, Fiyta Holdings Limited and Shennan Circuit Co., Ltd. in 2014.
He was the President of AVIC INT’L Beijing from March 2008 to January of 2014, and was responsible for the overall management
of AVIC INT’L Beijing’s business. Prior to joining AVIC INT’L Beijing, he was the Vice President of AVIC INT’L from August 2004 to
February 2008 and was in charge of strategic planning, ship-trading and shipbuilding business.
Presently, Mr Li also sits on the board of AVIC International Marine Engineering
Pte. Ltd., AVIC International Offshore Pte. Ltd., AVIC International Ship
Engineering Pte. Ltd., AVIC International Ship Development Pte. Ltd., Kaixin
Industrial Pte. Ltd., Deltamarin Floating Construction Pte.Ltd. (previously
known as Delta-AVIC Pte. Ltd.), AVIC Tidestar Fast Offshore Pte. Ltd. and
Deltamarin Ltd.
Mr Li Meijin
Executive Director
Mr Li graduated from North Western Polytechnical University with a Bachelor of Engineering in 1985. In 2000, he was accredited
as a senior engineer by Aviation Industry Corporation of China.
Mr Huang Guang (黄光) was first appointed as a Non-Executive Director
to our Board on 28 May 2013 and was last re-elected to our Board on 29
April 2014.
Since 20 March 2012, Mr Huang has also been appointed as the Senior
Vice President of AVIC International Holding Corporation. He currently sits
on the board of AVIC International Xiamen Co., Ltd. (“AVIC INT’L Xiamen”)
and used to sit on the board of AVIC International Offshore Pte. Ltd..
Mr Huang was appointed as a General Manager and Deputy Secretary
of the Party Committee at AVIC INT’L Xiamen in 2001. From 2008 to 2010,
he was also the General Manager and was promoted to the Secretary of
the Party Committee of the same company.
Mr Huang Guang
Non-Executive Director
Mr Sun Yan (孙燕) is our CEO and Executive Director. He was first
appointed to our Board as Non-Executive Director on 28 May 2013. He
was re-designated as an Executive Director and appointed as the CEO
of the Company on 17 January 2014 and was re-elected to our Board on
29 April 2014. Since November 2012, Mr Sun has been appointed as the
General Manager of AVIC International Ship Development (China) Ltd., a
subsidiary of our Company.
Mr Sun Yan
Executive Director and Chief Executive Officer
Mr Sun began his career in China National Aero-Technology Import & Export Corporation (“CATIC”) as an Assistant Manager
in 1985, and subsequently took on the role as Project Manager in CATIC’s Western Europe Trade Centre from 1987 to 1990. He
was a Manager in the Civilian Goods Department in CATIC from 1990 to 1993.
Mr Sun graduated from Beihang University (previously known as Beijing University of Aeronautics and Astronautics) with a
Bachelor Degree in 1985, and obtained a Masters of Business Administration from Renmin University of China in 2002. In 2008,
he took up shipping-related courses in Galbraith, one of the world’s longest established and respected shipbroking houses
in the world. He also participated in managerial courses in Zhonghang University in 2009, 2011 and 2012. In 2000, Mr Sun was
accredited as a Senior Engineer by the Aviation Industry Corporation of China.
20
AVIC International Maritime Holdings Limited
Mr Huang graduated from Xiamen University with a Bachelor of Arts in
1984. In 1996 he obtained a Master of Business Administration and then
he obtained an Executive Master of Business Administration in 2005 from
the same university.
Mr Huang Yongfeng (黄勇峰) is our Non-Executive Director. He was
appointed to our Board on 31 March 2014. Mr Huang was last re-elected
as a Director of our Board on 29 April 2014.
Mr Huang is currently the Chairman of the Board of Castic-SMP Machinery
Corporation Limited, a position he has held since December 2012. He was
also appointed as the Company Secretary to AVIC International Holdings
Limited since July 2012. Mr Huang also sits as a director on the boards of
Fitya Holdings Ltd., AVIC Real Estate Co., Ltd, Rainbow Department Store
Co., Ltd and Tianma Micro-electronics Co., Ltd..
Presently, Mr Sun sits on the board of companies such as AVIC International
Shanghai Co., Ltd (“AVIC INT’L Shanghai”), AVIC International Ship
Development (China) Ltd, Hong Kong AVIC International Shanghai
Company Limited, AVIC Dingheng Shipbuilding Co., Ltd., AVIC Weihai
Shipyard Co., Ltd. and AVIC International Offshore Pte. Ltd. amongst
others.
Mr Sun was appointed as the President of AVIC INT’L Shanghai in
November 2011 and was the Executive Vice President of the same company from April 2010 to November 2011. Prior to such
role, he was the Vice President of AVIC International Beijing Co., Ltd (“AVIC INT’L Beijing”) from January 2000 to April 2010.
From 1997 to 2000, Mr Sun was an Assistant to the President of AVIC INT’L Beijing. From 1996 to 1997, he worked as Manager
of the Import Department in AVIC INT’L Beijing. From 1993 to 1996, Mr Sun served as Manager in the Enterprise Department
in AVIC INT’L Beijing.
From 2001 to 2004, Mr. Li first served as Deputy Manager, Manager, and
thereafter as Assistant to General Manager of AVIC INT’L Xiamen,
Mr Li began his career in Xiamen South-East Aluminum Co., Ltd. where he has risen through the ranks, starting as a technician
in 1985 and left as a Factory Director in 2001.
From 2002 to 2004, Dr Diao was the vice president-cum-director of Shenzhen Pengji Group Limited (“Shenzhen Pengji”), a
company involved in property development, management and other industrial investment activities. In Shenzhen Pengji, he
was in charge of the overall management of the company’s industrial investment and certain property business. From 1995
to 2002, he was the Vice President of Shenzhen Investment Limited, a company listed on the Hong Kong Stock Exchange
and involved in property development and investment, and was in charge of the overall investment management of the
company’s business. From 1990 to 1995, Dr Diao was the director of the administration department of AVIC international
Shenzhen Company Limited. Prior to joining the AVIC Group, Dr Diao was a lecturer in business management and economics
related courses in Beijing Administrative College from 1987 to 1990.
Dr Diao is a certified senior engineer accredited by the Shenzhen city government. He graduated from Zhongshan University
with a Bachelor of Science in 1985, and obtained a Masters in Business Administration and a PhD in Management Science
and Engineering from Tongji University in 1996 and 2002 respectively. From 2005 to 2006, Dr Diao was engaged in postdoctoral
research on strategic studies in politics at Peking University.
From 2004 to August 2013, Mr Li was the Deputy General Manager at AVIC
International Xiamen Co., Ltd (“AVIC INT’L Xiamen”)
From July 1998 to February 2004, Mr Huang worked in AVIC International
Shenzhen Co., Ltd first as a Senior Project Manager in the Investment
Management Department, and subsequently as the Deputy Manager
Non-Executive Director
in the same department from February 2004. From August 2004 to
December 2007, Mr Huang was the Secretary of the Board of CATIC Shenzhen Co., Ltd. From December 2007 to November
2011, Mr Huang worked at AVIC International Shenzhen Company Limited, as a Manager of the Corporate Strategy and
Management Department, then as the Assistant to the General Manager before being appointed as the Deputy General
Manager of AVIC International Shenzhen Co.,Ltd. in November 2011.
MR HUANG YONGFENG
Mr Huang is a certified Senior Engineer accredited by the Aviation Industry Corporation of China. He graduated from
University of Science and Technology of China with a Bachelor of Science in Management in 1995 and a Master of
Engineering Management from Beihang University (previously known as Beijing University of Aeronautics and Astronautics) in
1998. He obtained an Executive Masters in Business Administration from China Europe International Business School in 2011.
Annual Report 2014
21
board of directors
Mr Teng Cheong Kwee was first appointed as the Lead Independent Director
to our Board on 18 April 2011 and was most recently re-elected to our Board
as an Independent Director on 29 April 2014. Mr Teng chairs our Nominating
Committee and is also a member of both the Remuneration Committee
and Audit Committee.
Mr Wang Mingchuan (汪名川) is our Non-Executive Director. He was first
appointed to our Board on 31 March 2014 and was most recently reelected to our Board as Non-Executive Director on 29 April 2014. Mr Wang is currently the Head of Finance Department and the Vice
Chief Accountant of AVIC International Holding Corporation. He is also
the Chief Accountant of AVIC International Shenzhen Co.,Ltd. (“AVIC
INT’L Shenzhen”) since September 2010. He currently sits as a director
on the boards of Fitya Holdings Ltd., AVIC Real Estate Co., Ltd., Rainbow
Department Store Co., Ltd and Tianma Micro-electronics Co., Ltd..
MR WANG MINGCHUAN
Non-Executive Director
Over the past two decades from 1992, Mr Wang has held several positions
at AVIC INT’L Shenzhen, including positions such as Manager, Deputy
Manager of the Finance Department, and the Vice Chief Accountant
and Chief Accountant of AVIC INT’L Shenzhen.
Prior to joining AVIC INT’L Shenzhen, Mr Wang worked in Shenzhen Shenrong Engineering Plastic Company as the Finance
Manager from February 1989 to January 1992.
Mr Wang is a certified accountant accredited by the Ministry of Finance of the People’s Republic of China and a certified
Senior Accountant accredited by Aviation Industry Corporation of China. He graduated from Southwestern University of
Finance and Economics with a Bachelor of Accounting in 1986, and obtained a Master of Science in Engineering from
Tongji University in 1996. He has also obtained an Executive Master in Business Administration from China Europe International
Business School in 2009.
Mr Teng is also currently serving as an independent director of several listed
companies, namely, Techcomp (Holdings) Ltd., Memtech International Ltd.,
StatsChipPac Ltd., First Resources Ltd., AEI Corporation Ltd and Junma Tyre
Cord Company Ltd.. He is also a Director of several unlisted companies:
Pheim Asset Management (Asia) Pte. Ltd., Pheim Sicav-SIF, T3Z Consultancy
& Advisory Pte. Ltd. and Kaixin Industrial Pte. Ltd.
MR TENG CHEONG KWEE
He was previously the Executive Vice President and Head, Risk Management
& Regulatory Division of the Singapore Exchange Ltd from 1999 to 2000.
Prior to that, he was the Executive Vice President at the Stock Exchange of
Singapore, and was responsible for listings, inspection and investigations from 1989 to 1999. From 1982 to 1989, Mr Teng was
appointed Secretary of the Securities Industry Council. From 1985 to 1989, he concurrently served as Assistant Director, and
later Deputy Director, in the Banking and Financial Institutions Department of Monetary Authority of Singapore (MAS).
Lead Independent Director
Mr Teng graduated from University of Newcastle, New South Wales, Australia in 1977 with First Class Honours in Bachelor of
Engineering (Industrial) and Bachelor of Commerce.
Mr Chong Teck Sin was first appointed as an Independent Director to our
Board on 18 April 2011 and was most recently re-elected to our Board as
an Independent Director on 29 April 2014. Mr Chong sits as the chair of
our Audit Committee and is a member of both our Nominating Committee
and Remuneration Committee.
Mr Liu Aiyi (刘爱义) is our Non-Executive Director. He was first appointed to
our Board on 31 March 2014 and was re-elected to our Board on 29 April
2014.
Mr Liu has been appointed as the General Manager of the Human Resource
Department of AVIC International Holding Corporation since July 2010.
Presently, Mr Li also sits on the board of Tianma Microelectronics Co., Ltd.,
Fiyta Holdings Limited, Shennan Circuit Co., Ltd., AVIC Real Estate Co.,Ltd.
and Rainbow Department Store Co.,Ltd..
MR LIU AIYI
Non-Executive Director
Prior to such appointment, Mr Liu had worked in Aviation Industry Corporation
of China since January 2001. He was first employed as the Vice Secretary,
as subsequently as the Secretary, of the Youth League Committee. In May
2003, he was transferred to the Human Resource Department, where he
assumed the role of a Senior Business Manager. In December 2006, he was
promoted to be the Director of Leader Cadre and from October 2010 to
July 2010, he was appointed as the Director of Talent and Executives of the Human Resource Department.
Mr Liu was formerly a Publicity Officer at AVIC Beijing Institute of Measurement Testing Technology, from August 1997 to January
2001.
Mr Liu is a certified Senior Political Officer accredited by the Aviation Industry Corporation of China. He graduated from Peking
University with Bachelor of Arts in Chinese Language and Literature in 1997 and has obtained a Master Degree in Public Policy
in the same university in 2008.
Mr Chong is also currently serving as an independent director of HKSE-listed
Changan Minsheng APLL Logistics Co., Ltd., SGX-listed Civmec Ltd. and
Innotek Ltd. Mr Chong is also a director on the board of Accordia Golf Trust
Management Pte. Ltd., the trustee-manager of the recently SGX-Listed
Accordia Golf Trust.
MR CHONG TECK SIN
Between April 2004 and March 2010, he was a board member of the
Independent Director
Accounting and Corporate Regulatory Authority of Singapore. Between
October 2008 and July 2010, he was also a board member of The National Kidney Foundation of Singapore. Prior to that from
1999 to 2004, he was the Group Managing Director (Commercial) of Seksun Corporation Ltd, a company listed on the SGX-ST.
He joined Glaxo Wellcome Asia Pacific Pte. Ltd. as its strategic development director for the People’s Republic of China from
1997 to 1999. From 1994 to 1997, he was the general manager (Marketing/Commercial) and subsequently senior general
manager (Marketing, Singapore operations and Singapore branch) of China-Singapore Suzhou Industrial Park Development
Co., Ltd., the developer of the China-Singapore Suzhou Industrial Park in the People’s Republic of China. Before that, he held
positions at Standard Chartered Bank from 1989 to 1994, the Economic Development Board from 1986 to 1989 and Nippon
Kaiji Kyokai, an international ship classification society, from 1981 to 1986.
Mr Chong graduated with a Bachelor of Engineering (Naval Architecture) from the University of Tokyo in 1981 on a Singapore
government scholarship and a Masters of Business Administration (MBA) from the National University of Singapore in 1987.
Mr Wang Puqu (王浦劬) was appointed to our Board as an Independent
Director on 28 May 2013 and was re-elected to the same position on 29
April 2014.
Mr Wang lectured at Peking University since 1988 and rose through its
ranks to become one of its academic professors in 1995.
His research expertise includes the theory and methods of politics as well
as government economics. Some of his published research papers include
“The Foundation of Politics”, “Research for Government Procurement of
Public Services from Social Organizations”, and “Through Democratic
Governance to Achieve Social and Livelihood”.
MR WANG PUQU
Mr Wang obtained a PhD in Law from Peking University in 1988. He also
holds a Bachelor and a Master Degree in Law from the same university.
Independent Director
22
AVIC International Maritime Holdings Limited
Annual Report 2014
23
board of directors
Ms Alice Lai Kuen Kan was first appointed to our Board as an Independent
Director on 18 April 2011, and was most recently re-elected to the same
position on 25 April 2013. Ms Kan also sits as the chair of our Remuneration
Committee and is a member of both our Audit Committee and
Nominating Committee.
Ms Kan is the controlling shareholder, the responsible officer and the
managing director of Asia Investment Management Limited, a corporate
advisory company, and Asia Investment Research Limited, a research
company, respectively, both of which are licensed corporations by the
Securities and Futures Commission of Hong Kong. She is also serving as an
independent director of several listed companies on the Hong Kong Stock
Exchange , namely, China Energine International (Holdings) Limited,
MS ALICE LAI KUEN KAN
Cosmopolitan International Holdings Limited, Regal Hotels International
Independent Director
Holdings Limited, Shimao Property Holdings Limited and Shougang
Concord International Enterprises Company Limited.
From 2005 to 1 April 2015, Ms Kan was the responsible officer at Lotus Asset Management Limited, which is principally involved
in investment management. From 1997 to 2002, Ms Kan was the Managing Director of Asia Financial Capital Limited, where
she was involved in corporate finance related advisory and investment management business in Hong Kong and the China.
Between 1995 and 1997, she was an Executive Director at Creditanstalt Capital Limited and Assistant General Manager at
Creditanstalt-Bankverein’s Hong Kong office. Both of these companies were involved in merchant banking and corporate
finance activities. From 1992 to 1995, Ms Kan was an executive director at ING Capital Markets (Hong Kong) Limited, and
was principally involved in merchant banking and corporate finance activities.
She was an associate director at Sun Hung Kai International Limited, a company involved in corporate finance activities,
from 1986 to 1992. Prior to this, she was the group accountant of a trading and investment holding company, G.S.Yuill &
Company Pty. Ltd., from 1984 to 1986, and was in charge of the overall accounting and financial control and management
of the company. Between 1981 and 1984, Ms Kan was the financial controller of Sun Hey Investment Company Limited,
an investment holding company. She was the financial controller of Hip Yick Company Limited, a company which was
involved in the manufacturing of garments, from 1980 to 1981 and the financial controller of the Gulfeast Group, which was
principally involved in the shipping business, between 1979 and 1980. From 1977 to 1979, Ms Kan was the financial controller
of a trading company, Mauri Brother and Thompsons Pty. Company Limited. Ms Kan was an assistant assessor at the Inland
Revenue Department of the Hong Kong Government from 1975 to 1977.
Key Management
MR LIAO HONGBING
Chief Financial Officer
Mr Liao Hongbing (廖红兵) is our Chief Financial Officer and is responsible for overseeing the finance and accounting
functions of the Group. He was appointed to the Company on 31 March 2014.
Presently, Mr Liao also sits on the board of AVIC International Offshore Pte. Ltd..
Mr Liao was appointed the Chief Accountant of AVIC International Ship Development (China) Co., Ltd since December
2013. He has also been appointed as the Vice President and Chief Accountant of AVIC International Shanghai Co., Ltd.
since April 2012.
Mr Liao has extensive background and experience in finance and accounting-related matters. Mr Liao was the Interim
General Manager of Beijing Kaitong Hengda Investment Management Co. Ltd. from March 2011 to April 2012. From July
2011 to April 2012, Mr Liao was the Manager of the Enterprise Management Department of AVIC International Beijing Co.,
Ltd. (“AVIC INT’L Beijing”). He was also concurrently appointed as the Assistant to General Manager in AVIC INT’L Beijing from
April 2009 to April 2012. Mr Liao was also the Chief Financial Officer of Taizhou CATIC Shipbuilding Heavy Industry Limited from
January 2008 to March 2011.
Mr Liao started his career as an accountant at China National Aeroborne Equipment Corp. from July 1989 and later joined
AVIC INT’L Beijing in March 1996 as an accountant. He joined TFT Tools Inc. as a Manager of the Finance Department in May
1997, where he was later promoted to be Vice President. He left TFT Tools Inc. in December 2003 when he was appointed as
the Deputy Manager of the Finance Department in AVIC INT’L Beijing from December 2003, until his promotion to Manager
in January 2006.
Mr Liao is a certified Senior Accountant accredited by the Aviation Industry Corporation of China. He graduated with
a Professional Qualification in Accountancy from Zhengzhou Institute of Aeronautical Industry Management in 1989 and
obtained an Executive Master in Business Administrative (EMBA) from Beihang University (formerly known as Beijing University
of Aeronautics and Astronautics), People’s Republic of China in 2013.
Ms Kan is a fellow member of the Association of Certified Accountants, the Hong Kong Institute of Directors and the Australian
Society of Certified Practising Accountants, and an associate member of the Hong Kong Society of Accountants. She is also
a licensed responsible officer under the Securities and Futures Ordinance with the Securities and Futures Commission of
Hong Kong.
24
AVIC International Maritime Holdings Limited
Annual Report 2014
25
Corporate and
Social Responsibility
As a state-owned company, the Group is committed to its social responsibility. On 30 July 2014, led by the
management of AVIC Maritime, a group of 200 staff participated in a donation event. In fact, over the last
few years, AVIC Maritime organized donation events from time to time to fund the AVIC International Holding
Corporation charity foundation. The foundation was set up to support needy students in remote areas in China,
through establishment of schools, providing learning facilities and financial aid etc.
On 27 May 2014, a group of 37 staff gave up their holiday and volunteered to join the firefighting against a
large forest fire at Li Kou Shan, together with the local fire service.
We are actively involved in various charitable activities in Singapore as well. In 2014, staff of AVIC Maritime
participated in “Race against Cancer”, a charity run organized by the Singapore Cancer Society. This was the
second time the Group participated in the activity.
Environmental Awareness
AVIC Maritime strives to apply its technological innovation in environmental protection in an effort to create a
sustainable society.
In 2014, to stimulate the economic
growth in rural areas in China, the
Group’s subsidiary AVIC International
Ship Development (China) Co.,Ltd
formed an assistance programme
that was dedicated to providing
financial support to Xianghua Village
in Shanghai. The funding effectively
solved the financial constraints of
the village, and assisted them in
infrastructure improvement. The
Group also bought the agricultural
products produced by the village on
a regular basis, and the household
income at the village increased.
In 2014, Deltamarin Ltd achieved a new milestone through its joint-venture with Oy Langh Tech Ab. The jointventure company-DeltaLangh Ltd, provides a unique environmentally friendly scrubber solution to ship-owners
which reduces the sulphur content of the exhaust gases to less than 0.1%.
At AVIC Maritime, we encourage
our people to take part in volunteer
work, and give back to community
by serving local needs.
26
AVIC International Maritime Holdings Limited
Annual Report 2014
27
Corporate Information
BOARD OF DIRECTORS
Diao Weicheng
(Executive Chairman)
Sun Yan
(Executive Director and Chief Executive Officer)
Li Meijin
(Executive Director)
Huang Guang
(Non-Executive Director)
Huang Yongfeng
(Non-Executive Director)
Wang Mingchuan
(Non-Executive Director)
Liu Aiyi
(Non-Executive Director)
Teng Cheong Kwee
(Lead Independent Director)
Chong Teck Sin
(Independent Director)
Wang Puqu
(Independent Director)
Alice Lai Kuen Kan
(Independent Director)
AUDIT COMMITTEE
Chong Teck Sin
(Chairperson)
Teng Cheong Kwee
Alice Lai Kuen Kan
NOMINATING COMMITTEE
Financial Contents
Report on Corporate Governance
30
Report of The Directors
50
Statement of Directors
52
Independent Auditors’ Report
53
Statements of Financial Position
54
PRINCIPAL PLACE OF BUSINESS
27-28th Floor, CATIC Mansion
212 Jiangning Rd
Shanghai, China, 200041
Consolidated Statement of Profit and Loss and
Other Comprehensive Income
55
AUDITORS
Statements of Changes in Equity
56
Consolidated Statement of Cash Flows
58
Notes to Financial Statements
59
Statistics of Shareholdings
106
Notice of The Annual General Meeting
107
COMPANY SECRETARY
Yap Lian Seng, LL.B. (Hons)
REGISTERED OFFICE
10 Collyer Quay
#27-00 Ocean Financial Centre
Singapore 049315
Tel: (65) 6389 3000
Fax: (65) 6389 3099
Email: [email protected]
Deloitte & Touche LLP
Public Accountants and
Chartered Accountants
6 Shenton Way
#33-00 OUE Downtown 2
Singapore 068809
(Partner-in-charge: Dr. Ernest Kan Yaw Kiong,
Chartered Accountants)
(Appointed since 15 April 2011)
SHARE REGISTRAR AND SHARE TRANSFER OFFICE
Boardroom Corporate & Advisory
Services Pte. Ltd.
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
Proxy Form
PRINCIPAL BANKERS
Bank of China, Singapore Branch
4 Battery Road
Bank of China Building
Singapore 049908
Teng Cheong Kwee
(Chairperson)
Diao Weicheng
Chong Teck Sin
Alice Lai Kuen Kan
REMUNERATION COMMITTEE
Alice Lai Kuen Kan
(Chairperson)
Teng Cheong Kwee
Chong Teck Sin
28
AVIC International Maritime Holdings Limited
Annual Report 2014
29
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
AVIC International Maritime Holdings Limited (the “Company”, and together with its subsidiaries, the “Group”)
is listed on the Mainboard of the Singapore Exchange Securities Trading Limited (the “SGX-ST”). The Group is
committed to maintaining a high standard of corporate governance and continues to strive towards a high
standard of corporate governance and transparency. Sound corporate governance provides an effective
safeguard against fraud and dubious financial engineering, and helps to protect our stakeholders’ interests
and contribute to the long term sustainability of the Company. This also helps the Company create long-term
value and returns for our shareholders.
Directors’ Training And Development
Corporate Governance Report
The Company is guided in its corporate governance practices by the applicable laws, rules and regulations,
the Listing Manual issued by the SGX-ST (the “Listing Manual”) and the principles and guidelines of the Code
of Corporate Governance 2012 (the “Code”). The Board of Directors of the Company (“Board”) is pleased to
report on the Company’s corporate governance processes and activities as required by the Code and the
relevant sections of the Listing Manual.
For the financial year ended 31 December 2014 (“FY2014”), the Group has complied in all material respects
with the principles laid down by the Code, and where there is any material deviation, appropriate explanation
has been provided within this Report. For easy reference, sections of the Code under discussion in this Report
are specifically identified.
Shareholders are reminded that this Report should be read as a whole as other sections of this Report may also
have an impact on the specific disclosures in any one section.
1. The Board’s Conduct Of Affairs
Principle 1: Every company should be headed by an effective Board to lead and control the company. The
Board is collectively responsible for the long-term success of the company. The Board works with
the Management to achieve this objective and the Management remains accountable to the
Board.
The Board
The Board comprises the following members:
Diao Weicheng Executive Chairman
Sun Yan
Executive Director and Chief Executive Officer (“CEO”)
Li MeijinExecutive Director
Huang Guang
Non-Executive Director
Huang Yongfeng
Non-Executive Director
Liu AiyiNon-Executive Director
Wang Mingchuan
Non-Executive Director
Teng Cheong Kwee Lead Independent Director
Chong Teck Sin Independent Director
Alice Lai Kuen Kan Independent Director
Wang Puqu
Independent Director
Collectively, the directors of the company (“Directors”) possess the core competencies and diversity of
experience, which enable the Board to function effectively. The Board oversees the business performance
and affairs of the Company and carries out the function by assuming responsibility for effective stewardship
and corporate governance of the Company and the Group.
Besides carrying out its statutory responsibilities, the principal functions of the Board are as follows:
•
•
•
•
•
•
30
overseeing and approving the Group’s overall long-term strategic objectives and directions;
overseeing and reviewing the management of the Group’s business affairs, performance and resource
allocation;
overseeing the processes of evaluating the adequacy of internal controls, risk management, financial
reporting and compliance;
identifying the key stakeholder groups and reviewing the effect of their perception on the company’s
reputation;
considering sustainability issues as part of its strategic formulation, and
assuming responsibility for corporate governance.
AVIC International Maritime Holdings Limited
To ensure that the Board is able to carry out its functions effectively, prior to all Directors’ respective appointments
to the Board, the Directors have been briefed by the Company’s legal adviser on their obligations as directors
under the relevant Singapore laws and regulations and the Listing Manual. The Directors were also briefed on
the Group’s business strategies and operations. Directors have the opportunity to visit the Group’s operational
facilities and meet with the Group’s management (“Management”) to gain a better understanding of the
Group’s business operations.
A formal letter is sent to newly-appointed directors upon their appointment setting out, among other matters,
their roles, obligations, duties and responsibilities as members of the Board.
In the course of serving their terms as members of the Board, the Directors are provided with updates on
changes in the relevant laws and regulations. The Company has set aside a budget for all Directors to
regularly attend appropriate courses, conferences and seminars to keep abreast of developments. These
include programmes run by the Singapore Institute of Directors and other training institutions. From time to time,
the Company also organises training sessions for Directors and Management. Previous trainings conducted
by the Company covered areas such as the roles and responsibilities of directors, continuing listing and
disclosure obligations, insider trading and other offences, investor and media relations, corporate governance
and financial reporting, risk management and internal control matters and also an introductory course on
understanding financial statements.
Directors’ Access to Information and Decision-making
Non-Executive Directors and Independent Directors are routinely kept apprised of ongoing business
developments and operations by the Executive Directors and the Management at meetings of the Board,
add-hoc meetings or via email and other communications.
Our Directors actively discuss, deliberate and appraise matters requiring their attention during regular meetings
held in the financial year. If required, time is set aside before or after scheduled Board meetings for discussion
amongst the Directors without the presence of Management. Non-Executive Directors and Independent
Directors, either individually or as a group, have full access to the Executive Directors, the Management and
the Company Secretary.
While the Management is responsible for the day-to-day operation and administration of the Group, the
approval of the Board is required for matters such as corporate restructuring, mergers and acquisitions, major
investments and divestments, material acquisitions and disposals of assets, major funding proposals, annual
financial budgets, major corporate policies on key areas of operations, the release of the Group’s quarterly,
half and full year results and interested person transactions of a material nature.
Delegation of Authority
To assist in the execution of its responsibilities, our Board has established four Board Committees:
• the Audit Committee (“AC”);
• the Nominating Committee (“NC”);
• the Remuneration Committee (“RC”); and
• the Executive Committee (“EC”).
The Board delegates specific areas of responsibilities to such Board Committees. These Board Committees
function within clearly defined written terms of reference and operating procedures, which are reviewed on
a regular basis to ensure their continued relevance. The Board Committees assist the Board in carrying out its
stewardship and fiduciary responsibilities.
To facilitate operational efficiency, the Group has also adopted a set of Approving Limits of Authority which sets
out the delegated authorisations and approval limits applicable to each level of the Group and Management
for specified transactions and corporate activities, as well as transactions that require Board approval. The
Limits of Authority is reviewed regularly by the Board with input from the Group’s Internal Auditors and the
Management.
Annual Report 2014
31
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
Meetings of the Board and Attendance
(4) Ms Chen Xiaohong, Mr Wu Weidong and Mr Li Wei resigned from their respective offices as Executive
Director, and Mr Xiao Zheng resigned from his office as Executive Director and Chief Financial Officer, on
31 March 2014.
The Articles of Association of the Company (the “Articles”) provide for meetings of the Board to be held by way
of physical meetings or telephonic or video conferencing. The Board and Board Committees may also make
decisions through circulating resolutions in writing. Board and Board Committee meetings are held regularly,
with the Board meeting being held not less than four (4) times a year.
(5) Mr Zou Kangning resigned from his office on 17 March 2014.
At those meetings, the Board reviewed, inter alia, the Group’s financial performance, corporate strategy,
significant operational matters and business plans. At each Board meeting, the Chairman of the Board will
also receive regular updates from the chairman of the respective Board Committees. In addition, the Board
regularly receives reports from the Management on the financial and operational performance of the Group,
and where applicable, updates on developments in the industry, and details on the Group’s compliance with,
various corporate governance and other regulatory requirements. Where any member of the Board is unable
to attend a meeting in person, he or she can participate by way of telephone or video-conference. From
time to time, the Board and the various Board Committees would, when required, approve various matters
conducted in the ordinary course of business through written resolutions which are circulated to the Directors.
The Executive Committee
The attendance of the Directors at the Board and Board Committee meetings held during FY2014 are set out
as follows:
The principal responsibilities of the EC are as follows:
Board
Total number of meetings
held in FY2014
4
Board Committees
Audit
Nominating
Remuneration
5
1
1
The EC comprises our Executive Chairman and the following Executive Directors:
Diao Weicheng Chairman
Sun YanMember
Li MeijinMember
The EC is formed for the purpose of supervising the Management of the Group’s operations, as well as facilitating
and streamlining the Group’s decision making process. This Committee is delegated with the authority and
responsibility for the operational management of the Group, within Limits of Authority delegated by the Board.
(a) making key decisions on the operational management and supervision of the Management of the Group’s
operation;
(b) managing acquisition, disposal and transfer of fixed assets within limits authorised by the Board;
(c) approving operational expenditure within authorised limits;
(d) entering into sale and purchase contracts in relation to shipbuilding and ship-trading within authorised limits;
(e) managing procurement in relation to shipbuilding contract expenditure within authorised limits;
Number of meetings attended
(f) entering into operational contracts within authorised limits;
Diao Weicheng
4/4
N/A
1/1
1(1) /1
Sun Yan(2)
3/4
N/A
N/A
N/A
Li Meijin(3)
3/3
1(1) /5
N/A
N/A
Huang Guang 2/4
N/A
N/A
N/A
Huang Yongfeng(3)
2/3
N/A
N/A
N/A
Liu Aiyi(3)
2/3
N/A
N/A
N/A
Wang Mingchuan(3)
2/3
N/A
N/A
N/A
Teng Cheong Kwee
4/4
4/5
1/1
1/1
Chong Teck Sin
4/4
5/5
1/1
1/1
Alice Lai Kuen Kan
4/4
5/5
1/1
1/1
2. BOARD COMPOSITION AND GUIDANCE
Wang Puqu
3/4
N/A
N/A
N/A
0/1
N/A
N/A
N/A
Chen Xiaohong
1/1
N/A
N/A
N/A
Principle 2: There should be a strong and independent element on the Board, which is able to exercise
objective judgment on corporate affairs independently, in particular, from Management and
10% shareholders. No individual or small group of individuals should be allowed to dominate the
Board’s decision making.
Li Wei(4)
1/1
N/A
N/A
N/A
Wu Weidong(4)
1/1
N/A
N/A
N/A
Zou Kangning(5)
0/1
N/A
N/A
N/A
Xiao Zheng(4)
(4)
N.A.: Not applicable
(1) Attended the meetings as an invitee.
(2) Mr Sun Yan was appointed as the Non-Executive Officer on 28 May 2013 and re-designated as an Executive
Director and the CEO of the Company on 17 January 2014.
(3) Mr Li Meijin was appointed as an Executive Director of the Company on 31 March 2014. Mr Huang
Yongfeng, Mr Wang Mingchuan and Mr Liu Aiyi were appointed as as Non-Executive Directors of the
Company on 31 March 2014.
32
AVIC International Maritime Holdings Limited
(g) obtaining borrowings and credit facilities within authorised limits;
(h) writing-off trade and non-trade receivables within authorised limits;
(i) granting credit limits to trade debtors within authorised limits; and
(j) reviewing the performance of the Company and the Group, deliberating on corporate strategies,
group business and principal risks, addressing important operational and financial issues and making
recommendations to the Board for approval.
Any decisions or transactions that exceed the above scope would require separate Board approval. The
execution of any of the above transactions needs to be approved by the Chairman of the EC and any one
other member of the EC.
The Board comprises eleven (11) Directors of whom four (4) are independent. The Independent Directors are:
Mr Teng Cheong Kwee, Mr Chong Teck Sin, Ms Alice Lai Kuen Kan and Mr Wang Puqu. Mr Teng Cheong Kwee,
Mr Chong Teck Sin and Ms Alice Lai Kuen Kan, each serve as Chairman of the NC, AC and RC respectively.
The criterion of independence is based on the definition set out in the Code. The Board considers an
“Independent Director” as one who has no relationship with the Company, its related companies, its 10%
shareholders or its officers who could interfere, or be reasonably perceived to interfere, with the exercise
of the Director’s independent judgment in the conduct of the Group’s affairs. The Board believes there is a
strong element of independence in the Board, with more than one third of the Board’s composition comprising
Independent Directors, and that no individual or small group of individuals dominates the Board’s decision
making. The Board exercises independent judgment on corporate affairs and provides Management with
a diverse, professional and objective perspective on issues. The independence of each Director is reviewed
annually by the NC. Each Independent Director is required to complete a Confirmation of Independence
annually to confirm his independence based on the guidelines as set out in the Code.
Annual Report 2014
33
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
Guideline 2.2 of the Code requires Independent Directors to make up at least half of the Board in the situation
where the Chairman of the Board is part of the Management team, and to effect the necessary change in
Board composition at the annual general meetings following the end of financial years commencing on or
after 1 May 2016. The Company has begun reviewing its Board composition so as to work towards complying
with this requirement. In the interim, the four Independent Directors, which make up more than one-third of the
Board, continue to help to uphold good corporate governance and their presence facilitates the exercise of
independent and objective judgment on the Board.
4. BOARD MEMBERSHIP
The Board comprises persons who possess core competencies and experience in accounting and finance,
business and management experience, and strategic planning, as well as industry knowledge. The composition
of the Board is reviewed on an annual basis by the NC to ensure that the Board has the appropriate mix of
expertise and experience, and collectively possesses the necessary core competencies for effective functioning
and informed decision-making. None of our Independent Directors has served on the Board beyond nine years
from the date of his or her appointment.
The NC and the Board annually reviews and assesses the structure, size and composition of the Board. Both the
NC and the Board are of the view that the Board’s current size and composition allows for effective decision
making, taking into account the scope and nature of the operations of the Group.
The Independent Directors actively participate in the Board Committees. They communicate regularly to
discuss matters such as the Group’s financial performance, industry conditions and outlook, corporate
governance initiatives, and board processes. When necessary, the Independent Directors conduct informal
meeting sessions without the presence of the Management.
3. CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the
executives responsible for managing the company’s business. No one individual should represent
a considerable concentration of power.
Dr Diao Weicheng is the Executive Chairman of the Company. From 20 June 2012 to 16 January 2014, Dr Diao
was also concurrently appointed as the Interim Chief Executive Officer of the Company. Mr Sun Yan was first
appointed as a Non-Executive Director of the Company on 28 May 2013, and thereafter re-designated as the
CEO and Executive Director of the Company with effect from 17 January 2014. With Mr Sun Yan’s appointment
as CEO, the responsibilities of the CEO and the Chairman of the Board are clearly separated and delineated
to ensure an appropriate balance and separation of power.
As the Executive Chairman, Dr Diao leads the Board in the performance of its functions and steers the discussions
and facilitate the decision-making of the Board on strategic, business and other key issues relating to the
business and the operations of the Group. The Chairman encourages active engagement and participation
of all Directors in the meetings and discussion and facilitates constructive relationship between the Board and
the Management.
Dr Diao maintains close consultation with all Board members, and ensures that each member of the Board and
the Management work well together with integrity and competency. By his leadership, he sets the tone of Board
discussions to promote open and frank debate and effective decision making. Dr Diao also takes a leading
role in ensuring the Company’s drive to achieve and maintain a high standard of corporate governance
practices. Dr Diao is responsible for ensuring that Board meetings are held as and when necessary and matters
that require the attention of the Board are included in the agendas, and further that adequate information
and time is provided to the Board members to facilitate discussion and decision-making. He is assisted by
the Company Secretary at all Board Meetings. Dr Diao also ensures that there is effective communication
between the Company and its shareholders.
As the CEO, Mr Sun Yan is in charge of the overall operations and management of the Group, as well as
implementing the strategic policies, directions or decisions made by the Chairman and/or the Board of the
Company. The CEO and the Management are accountable to the Board for the conduct and performance
of the operations of the Group.
To enhance the independence of the Board, Mr Teng Cheong Kwee is also appointed as the Lead Independent
Director. As Lead Independent Director, Mr Teng serves as the leader of the Independent Directors in raising
queries and takes up matters where circumstances required. Periodically, Mr Teng will convene meetings of the
Independent Directors, without the presence of Executive Directors and the Management, and will provide
feedback to the Executive Chairman after such meetings.
34
AVIC International Maritime Holdings Limited
Principle 4: There should be a formal and transparent process for the appointment and re-appointment of
directors to the Board.
The NC is responsible for making recommendations on all board appointments and re-nominations of Directors
seeking re-election. The appointment and re-appointment of the Directors is then approved by the Board.
The NC is made up of the following members:
Mr Teng Cheong Kwee Chairman
Dr Diao Weicheng
Member
Mr Chong Teck Sin Member
Ms Alice Lai Kuen Kan
Member
Except for Dr Diao Weicheng, all the members of the NC, including the Chairman, are independent and nonexecutive.
The NC is guided by the written terms of reference, which set out the duties and responsibilities of the NC, and
are approved by the Board. The principal responsibilities of the NC include, inter alia, the following:
(a)conducting an annual review of the size, composition and core competencies of and skills required by the
Board and the Board Committees;
(b)making recommendations to the Board on the appointment of new Executive and Non-Executive Directors,
including making recommendations on the composition of the Board generally and the balance between
Executive and Non-Executive Directors appointed to the Board;
(c)reviewing, assessing and recommending nominee(s) or candidate(s) for appointment or election to the
Board, having regard to his/her qualifications, competency and whether or not he/she is independent and
in the case of a re-nomination, to his/her contribution and performance (e.g. attendance, preparedness,
participation and candour);
(d)determining, on an annual basis, if a Director is independent;
(e)reviewing and approving any new employment of related persons and the proposed terms of their
employment;
(f) reviewing the Board succession plans for directors, in particular, the Chairman and CEO;
(g)assessing the effectiveness of the Board as a whole and the contribution of each individual Director to the
effectiveness of the Board, and to decide how the Board’s performance may be evaluated and propose
objective performance criteria;
(h)deciding whether or not a Director is able to and has been adequately carrying out his/her duties as a
Director of the Company, particularly when he/she has multiple board representations and other principal
commitments; and
(i) reviewing training and professional development programs for the Board on an annual basis.
When an existing Director chooses to retire or the need for a new Director arises, either to replace a retiring
Director or to enhance the Board’s strength, the NC, in consultation with the Board and the Management,
evaluates and determines the selection criteria and any potential candidate, whether proposed by the
Management or the Directors or identified through the NC’s network of contacts or identified by way of an
engagement of external professional search firms. The NC will meet or conduct telephone interviews with
the proposed candidates to assess suitability and ensure that the candidates are suitable before nominating
suitable candidates to the Board for approval and appointment as Directors.
New Directors are only appointed to the Board after the NC has reviewed and considered the skills,
qualifications and experience of the nominated Director. The NC further considers factors such as the ability of
the prospective candidate to contribute to the discussions of the Board and the Board Committees, taking into
consideration the composition of the Board and the mix of expertise, skills and attributes of existing Directors.
Further, the NC, in considering the re-appointment of a Director, evaluates such director’s contribution and
performance, such as his attendance at meetings.
Annual Report 2014
35
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
Pursuant to its duties and responsibilities, the NC has conducted its annual review of the Independent Directors’
independence and is of the view that Mr Teng Cheong Kwee, Mr Chong Teck Sin, Ms Alice Lai Kuen Kan and
Mr Wang Puqu are “independent” in accordance with the Code.
6. ACCESS TO INFORMATION
Pursuant to the Article 91 of the Company’s Articles of Association, one-third of the Directors for the time being
is required to retire from office by rotation, such that all Directors shall retire from office once at least every
three years. The Directors to retire in each year shall be those subject to retirement by rotation who have been
longest in office since their last re-election or appointment and so that as between those persons who became
or were last re-elected as Directors on the same day, those retiring shall (unless they otherwise agree among
themselves) be determined by lot.
Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate and
timely information prior to the Board meetings and on an on-going basis so as to enable them to
make informed decisions to discharge their duties and responsibilities.
Accordingly, at this upcoming Annual General Meeting (“AGM”), the NC has recommended and the Board
has approved that:
To enable the Board to fulfil its responsibilities, the Management strives to provide Board members with
adequate information for Board meetings on a timely and ongoing basis. Prior to each Board meeting, the
members of the Board are each provided with the relevant documents and information necessary, including
financial statements together with background and explanatory statements, and progress reports of the
Group’s business operations. Further, the Directors are entitled to request from Management such additional
information as required in order to make informed and timely decisions. The Board has unrestricted access to
the Company’s records and information.
• Dr Diao Weicheng and Ms Alice Lai Kuen Kan, being the longest serving directors, shall retire and stand
for re-election; and
As a general rule, notices are sent to the Directors in advance of Board meetings, followed by the Board
papers.
• Mr Chong Teck Sin and Mr Li Meijin, having volunteered to stand for re-election, shall retire and stand for
re-election.
Board members (whether individually or as whole) have separate and independent access to the Management
and the Company Secretary at all times, and may, where necessary, seek independent professional advice
at the expense of the Company. The Company Secretary generally attends all formal meetings of the Board
and the Board Committees and ensures that all procedures are followed. Where the Company Secretary is
unable to attend any Board meeting, he ensures that a suitable replacement is in attendance and that proper
minutes of the same are taken and kept.
• For more information, please refer to the section on the “Notice of the Annual General Meeting” in this
Annual Report.
Particulars of the Directors
None of the Directors hold any shares in the Company and its related corporations. More information on the
academic and professional qualifications of the Directors and their directorships are found the Section on
“Board of Directors” of this Annual Report found on pages 20 to 25.
The NC notes that some of the Directors also serve on the boards of a number of other listed companies.
The NC and the Board have not made a determination of the maximum number of board representations a
director may hold because the Board believes that each director has to personally determine the demands
of his or her competing directorships and obligations and assess how much time is available to serve on the
Board effectively. The Board and the NC are of the opinion that in determining whether a Director is able to
devote sufficient time to discharge his duties, the assessment should take into account the level of Directors’
participation in the Company, including his contributions and during meetings of the Board and relevant Board
Committee and his attendance at such meetings. Taking into account the above, both the Board and NC are
satisfied that, despite multiple board representations in certain instances, each Director has devoted sufficient
time and attention to the affairs of the Company and has adequately fulfilled their duties as Directors of the
Company.
5. BOARD PERFORMANCE
Principle 5: There should be a formal annual assessment of the effectiveness of the Board as a whole and its
board committees and the contribution by each director to the effectiveness of the Board.
The NC is responsible for recommending to the Board a framework for evaluating the performance of the
Board as a whole, its Board Committees, and of each individual Director. Each member of our NC shall abstain
from voting on any resolutions in respect of the assessment of his performance or re-nomination.
The NC has adopted a framework, which is reviewed from time to time, for assessing the performance
and effectiveness of the Board. The performance criteria for the Board measures factors such as the size
and composition of the Board, the Board’s access to information, accountability, Board processes, Board
performance in relation to discharging its principal responsibilities, communication with management and
standard of conduct of the Directors. The NC has also incorporated a performance review framework assessing
the effectiveness of each of the Board Committees, as well as each individual Director.
An annual evaluation by the NC of the Board and its Board Committees’ performance is conducted through
completion of a questionnaire and an individual self-assessment by each Director. The NC reviewed and
discussed the results of the evaluation, and presented the findings to the Board. The primary objective of
the board evaluation exercise is to provide a platform for the Board and the Board Committees members to
provide constructive feedback on the board processes and procedures and the effectiveness of the Board
and the Board Committees.
36
AVIC International Maritime Holdings Limited
The Company Secretary also ensures that the Company complies with the requirements of the Companies
Act, Cap. 50, of Singapore (“Companies Act”) and the Listing Manual. Under the direction of the Executive
Chairman, the Company Secretary’s responsibilities include ensuring good information flow within the Board
and its Board Committees and between senior management and Non-Executive Directors, as well as facilitating
orientation and assisting with professional development as required. The appointment and removal of the
Company Secretary is subject to the Board’s approval.
The Board in fulfilling its responsibilities, can as a group or individually, when deemed fit, direct the Company to
appoint professional adviser(s) to render professional advice.
7. PROCEDURES FOR DEVELOPING REMUNERATION POLICIES
Principle 7: There should be a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual directors. No director should
be involved in deciding his own remuneration.
The RC makes recommendations to the Board on the framework of remuneration, and the specific remuneration
packages for each Director and key management personnel, including the CEO. The RC is made up of the
following members:
Ms Alice Lai Kuen Kan
Mr Teng Cheong Kwee Mr Chong Teck Sin Chairperson
Member
Member
All the members of the RC, including the Chairperson, are independent and non-executive. The RC is guided
by the written terms of references, which set out the duties and responsibilities of the RC, and are approved by
the Board. The principal responsibilities of the RC include, inter alia, the following:
(a)
recommending to the Board a framework of remuneration for the Directors and Executive Officers which
covers all aspects of remuneration, including but not limited to directors’ fees, salaries, allowances,
bonuses, options and benefits-in-kind;
(b)
determining specific remuneration packages for each Executive Director;
(c)
recommending to the Board the remuneration of the Non-Executive Directors, which should be
appropriate to the level of their respective contributions, taking into account factors such as effort and
time spent, and the responsibilities of the Non-Executive Directors;
(d)
determining the targets for any performance-related pay schemes in respect of the Executive Directors
of the Group and to recommend to the Board the terms of renewal of their service contracts;
Annual Report 2014
37
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
(e) reviewing the Company’s obligations arising in the event of termination of the Executive Directors’ and
Executive Officers’ service contracts.
The remuneration paid or payable to the Directors and Executive Officers for services rendered for FY2014 by
percentage is, as follows:
The RC has access to appropriate expert advice regarding executive compensation matters, if required. The
RC’s recommendations will be submitted for endorsement by our Board. Each member of the RC refrains from
voting on any resolutions, participating in any deliberation or making any recommendation in respect of the
assessment of his remuneration. No Director is involved in deciding his own remuneration.
The remuneration packages of the Executive Directors are based on service contracts. The Non-Executive and
Independent Directors are paid yearly directors’ fees and these fees are subject to shareholders’ approval at
the AGM. In setting the remuneration packages of the Executive Directors, the Company takes into account
the performance of the Group and that of the Executive Directors which are aligned with long term interest
and risk policies of the Group.
The RC will be provided with access to expert professional advice on remuneration matters when necessary,
and the expenses of such services shall be borne by the Company.
8. LEVEL AND MIX OF REMUNERATION
Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk
policies of the company, and should be appropriate to attract, retain and motivate (a) the
directors to provide good stewardship of the company, and (b) key management personnel
to successfully manage the company. However, companies should avoid paying more than is
necessary for this purpose.
The Executive Directors have entered into service agreements with the Company for an initial term of three
(3) years which will be renewed thereafter on an annual basis until terminated by not less than six (6) months’
notice in writing served by either party on the other.
The remuneration package of the Executive Directors and key management personnel includes basic salary
and contribution to compulsory pension plans as required under the relevant PRC laws. In setting remuneration
packages, the Company takes into consideration the remuneration and employment conditions within the
same industry and in comparable companies. Executive Directors do not receive any directors’ fees but
are remunerated as members of the Management. The RC reviews the compensation annually and ensure
the remuneration of the Executive Directors and key management personnel is commensurate with their
performance and that of the Company, giving due regard to the financial and commercial health and
business needs of the Group.
The Company does not currently provide any remuneration to its Non-Executive Directors, except for any
reimbursements on reasonable costs and expenses incurred.
The Independent Directors receive directors’ fees, taking into account factors such as effort and time spent,
as well as the responsibilities and obligations of the Directors. The Company recognises the need to pay
competitive fees to attract, motivate and retain Directors without being excessive and thereby maximise
shareholders’ value.
9. DISCLOSURE ON REMUNERATION
Principle 9: Each Company should provide clear disclosure of its remuneration policies, level and mix of
remuneration, and the procedure for setting remuneration, in the company’s Annual Report. It
should provide disclosure in relation to its remuneration policies to enable investors to understand
the link between remuneration paid to directors and key management personnel, and
performance.
Generally, the nature of the role performed and market practice are taken into consideration in determining
the composition of the remuneration package for each of its staff. For key executive officers (“Executive
Officers”), the Company adopts a performance-driven approach to compensation with rewards linked to
individual, team and corporate performance.
38
AVIC International Maritime Holdings Limited
Remuneration
bands
Performance
Bonus
%
Directors’
Fees
%
Allowances
%
Other Benefits
%
Total
%
100
-
-
-
-
100
100
100
100
100
N/A
100
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100
100
100
100
N/A
100
-
-
100
-
-
100
-
-
100
100
100
-
-
100
100
100
N/A
100
N/A
-
N/A
-
N/A
-
N/A
-
N/A
100
Salary
%
Directors
S$250,000 to below S$500,000
Diao Weicheng
Directors
Below S$250,000
Sun Yan(1)
Chen Xiaohong(2)
Wu Weidong(2)
Li Wei(2)
Xiao Zheng(2)
Li Meijin (3)
Huang Guang
Huang Yongfeng(4)
Liu Aiyi(4)
Wang Mingchuan(4)
Zou Kangning(5)
Teng Cheong
Kwee
Chong Teck Sin
Alice Lai Kuen Kan
Wang Puqu
Executive Officers
Below S$250,000
Zhang Yiqiong(6)
Liao Hongbing(7)
N/A
N/A
N/A
N/A
Note:
(1) Mr Sun Yan was appointed as a Non-Executive Officer on 28 May 2013 and was re-designated as an Executive Director
and the CEO of the Company on 17 January 2014.
(2) Mr Li Wei, Mr Wu Weidong, Mr Xiao Zheng and Ms Chen Xiaohong, our former Executive Directors, resigned from their
offices as directors on 31 March 2014. Mr Xiao Zheng also resigned as the Chief Financial Officer of the Company on
31 March 2014.
(3) Mr Li Meijin was appointed as an Executive Director of the Company with effect from 31 March 2014.
(4) Mr Huang Yongfeng, Mr Liu Aiyi and Mr Wang Mingchuan were appointed as Non-Executive Directors of the Company
with effect from 31 March 2014. None of Mr Huang Yongfeng, Mr Liu Aiyi and Mr Wang Mingchuan drew any
remuneration from the Company for FY2014.
(5) Mr Zou Kangning resigned as a Non-Executive Director on 17 March 2014.
(6) Ms Zhang Yiqiong resigned as a Vice President of the Company with effect from 18 June 2014.
(7) Mr Liao Hongbing was appointed as the Chief Financial Officer with effect from 31 March 2014.
The salary shown is inclusive of compulsory pension plans as required under the relevant PRC and/or Singapore
laws. The Directors’ fees are subject to shareholders’ approval at the AGM.
The remuneration of the key executive officers and the Executive Directors, including the CEO, has been
disclosed in bands of S$250,000. The Board is of the view that it would not be in the best interest to disclose
the details of the remuneration, having regard to the highly competitive human resource environment, the
confidential nature of staff remuneration matters and so as not to hamper the Company’s efforts to retain and
nurture its talent pool.
Annual Report 2014
39
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
For FY2014, the aggregate amount of the total remuneration paid or payable to the Independent Directors in
terms of Directors’ fees (disclosed to the nearest thousand) is S$280,000, as indicated in the table below:
In addition, the external auditors of the Company, as part of their annual audit of the Group’s financial
statements, considered the Group’s system of internal controls, including accounting procedures, internal
controls and other aspects of the Group’s business covered by their audit procedures. Any material weaknesses
in internal controls, together with recommendations for improvement, are reported to the AC. In connection
with the external audit of the financial statements of the Group for FY2014, the external auditors, Deloitte &
Touche LLP have reviewed the books, records and internal accounting controls of the Group and have not
identified any material internal control weaknesses.
Directors
Fees(S$)/ year
Aggregate Fees Paid
for FY2014 (S$)
Total (%)
Teng Cheong Kwee
80,000
80,000
100
Chong Teck Sin
80,000
80,000
100
Alice Lai Kuen Kan
80,000
80,000
100
Wang Puqu
40,000
40,000
100
The aggregate amount of total remuneration paid by way of salaries to the Executive Directors in FY2014 is not
more than S$708,000. The Non-Executive Directors do not to receive any fees for their roles as a Non-Executive
Director of the Company.
The aggregate amount of the total remuneration paid to the Executive Officers (who are not directors or CEO)
for FY2014 is not more than S$100,000. The Company’s current key Executive Officers comprise its Executive
Directors (Dr Diao Weicheng, Mr Sun Yan and Mr Li Meijin), and its Chief Financial Officer, Mr Liao Hongbing.
Accordingly, Mr Liao Hongbing is the only key management personnel who is not a Director of the Company.
The Company has no share option plans. Accordingly, no share option has been granted to the above
Directors and Executive Officers.
There were no employees of the Group who are immediate family members of a Director or the CEO of the
Company, and whose remuneration exceeded S$50,000 during FY2014. “Immediate family member” means
the spouse, child, adopted child, stepchild, brother, sister and parent.
10. ACCOUNTABILITY AND AUDIT
Principle 10: The Board should present a balanced and understandable assessment of the company’s
performance, position and prospects.
Through the quarterly, half yearly and annual financial statements and timely announcements to shareholders,
the Board aims to provide shareholders with adequate details that would allow a balanced and understandable
assessment of the Group’s financial performance, position and prospects. This responsibility extends to reports
to regulators. The AC has been tasked to review the Company’s financial information to ensure that the
objective is met.
The Management currently provides the Board with appropriately detailed management accounts and such
explanation and information on a regular basis and as the Board may require from time to time, to enable the
Board to make a balanced and informed assessment of the Group’s performance, position and prospects. The
Board will update the Shareholders on the operations and financial position of the Company through quarterly,
half yearly and full year announcements as well as timely announcements of other matters as prescribed by
the relevant rules and regulations.
The Board has established written policies where appropriate, to ensure compliance with legislative and
regulatory requirements such as the Listing Manual.
11. RISK MANAGEMENT AND INTERNAL CONTROLS
Principle 11:
The Board is responsible for the governance of risk. The Board should ensure that Management
maintains a sound system of risk management and internal controls to safeguard shareholders’
interests and the company’s assets, and should determine the nature and extent of the
significant risks which the Board is willing to take in achieving its strategic objectives.
The Group’s internal controls and systems are designed to provide reasonable assurance as to the integrity and
reliability of the financial information and to safeguard and maintain accountability of assets. Procedures are
in place to identify major business risks and evaluate potential financial effects, as well as for the authorisation
of capital expenditure and investments.
The Board notes that under the Code, it is responsible for the governance of risks. The Board ensures that the
Management maintains a sound system of risk management and internal controls to safeguard shareholders’
interest and the Company’s assets, and determine the nature and extent of the significant risks which the
Board is willing to take in achieving its strategic objectives. The Management regularly reviews the Group’s
business and operational activities to identify areas of significant business risks as well as appropriate measures
to control and mitigate these risks. The Management reviews all significant control policies and procedures and
highlights all significant matters to the Board and the AC.
The Board has received assurance from the CEO and CFO that:
(i) the financial records have been properly maintained and the financial statements give a true and fair view
of the Company’s operations and finances; and (ii) the Company risk management and internal control systems in place are effective.
The Board is satisfied that the system of internal procedures, controls and reviews that the Group has in place
provides reasonable assurance against material financial misstatements or loss, safeguarding of assets, the
maintenance of proper accounting records, reliability of financial information, compliance with legislation,
regulations and best practices and the identification and management of business risks. The Board, with the
concurrence of the AC, is therefore of the opinion that the Group’s system of internal controls is adequate to
address financial, operational, and compliance and information technology risks that the Group faces in its
current business environment.
The Board notes that, despite their best efforts to implement risk management systems, no cost-effective
system of internal control can provide absolute assurance against the occurrence of material errors, poor
judgment in decision-taking, human error, fraud or other irregularities. The system is designed to manage rather
than eliminate all risks. As such, risk assessment and evaluation is an essential part of business planning and
monitoring.
12. AUDIT COMMITTEE
Principle 12: The Board should establish an Audit Committee (“AC”) with written terms of reference which
clearly set out its authority and duties.
The AC is made up of the following members:
Mr Chong Teck Sin
Mr Teng Cheong Kwee Ms Alice Lai Kuen Kan
Chairman
Member
Member
All the members of the AC, including the Chairperson, are independent and non-executive. The NC and the
Board are of the view that the members of the AC collectively, and the AC Chairman, have the requisite
qualification, recent and relevant financial management knowledge, expertise and experience to discharge
their responsibilities properly.
The AC is guided by the written terms of references, which set out the duties and responsibilities of the AC, and
are approved by the Board. The principal responsibilities of the AC include, inter alia, the following:
(a) reviewing, together with the internal and external auditors, the audit plan, their evaluation of the system
of internal accounting controls, their letter to the Management and the Management’s response. It is
intended that the AC shall, at least once a year, have a separate session with the internal and external
auditors without the presence of the Management; The Group appoints internal auditors to carry out a review of the adequacy and effectiveness of the Group’s
key internal controls, including financial, operational, compliance and information technology controls as well
as risk management systems to the extent of their scope as laid out in their audit plan. The AC also reviews the
effectiveness of the actions taken by the Management on the recommendations made by the internal auditors
in this respect. To facilitate the AC, internal auditors to make an informed assessment of the Group’s internal
controls, information such as financial records and financial statements are provided by the Management.
40
AVIC International Maritime Holdings Limited
Annual Report 2014
41
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
(b)reviewing the quarterly, half yearly and annual results announcements before submission to our Board
for approval, focusing in particular on changes in accounting policies and practices, major risk areas,
significant adjustments resulting from the audit, compliance with accounting standards and compliance
with the Listing Manual and any other relevant statutory or regulatory requirements;
The AC has reviewed and is satisfied that the external auditors have not provided any non-audit services to the
Group during FY2014 that will prejudice their independence and objectivity.
(c)reviewing and reporting to the Board at least annually on the adequacy and effectiveness of the internal
control procedures implemented by the Group, determining the scope of internal audit examinations and
ensuring co-ordination between the internal/external auditors and the Management, and reviewing the
assistance given by the Management to the auditors, and discussing problems and concerns, if any, arising
from audits, and any matters which the auditors may wish to discuss (in the absence of the Management,
where necessary);
(d)reviewing and discussing with the external auditors any suspected fraud or irregularity, or suspected
infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on our
Group’s operating results or financial position, and the Management’s response;
(e)considering and recommending to the Board on the proposals to the shareholders on the appointment,
re-appointment and removal of the external auditors, matters relating to the resignation or dismissal of the
auditors and approving the remuneration and terms of engagement of the external auditors;
(f) reviewing interested person transactions (if any) falling within the scope of Chapter 9 of the Listing Manual;
(g)reviewing potential conflicts of interests, if any;
(h)undertaking such other reviews and projects as may be requested by the Board, and reporting to the Board
its findings from time to time on matters arising and requiring the attention of the AC;
(i) generally undertaking such other functions and duties as may be required by statute or the Listing Manual,
or by such amendments as may be made thereto from time to time;
(j) reviewing and approving all hedging policies and instruments to be implemented by our Group, if any; and
(k) reviewing and approving the appointment of the Chief Financial Officer and Financial Controller to the
extent that the finance and accounting function is appropriately resourced.
The AC has full authority to investigate any matter within its terms of reference, and will be given full access
to and full co-operation from the Management and external and internal auditors and full discretion to invite
any Director, Executive Officer or other employee of the Group to attend its meetings, and is given reasonable
resources to enable it to discharge its functions properly and effectively. The AC also undertakes such further
functions as may be agreed to by the AC and the Board from time to time.
For it to be able to perform its functions effectively, the AC meets with the external auditors and with the
internal auditors, without the presence of the Management, at least annually for a review and discussion of
any key issues raised.
During the course of FY2014, the AC’s activities included:
(a) reviewing the quarterly, half yearly and annual results announcements before submission to the Board for
approval;
(b) reviewing the internal control procedures implemented by the Group;
(c) reviewing the annual audit plan, approving any changes as necessary;
(d) reviewing the appointment of the independent internal auditor;
(e) reviewing the appointment of the independent external auditor;
(f) reviewing the interested party transactions falling within the scope of chapter 9 of the listing manual; and
(g) reviewing the group’s financial and operating results and accounting policies.
External Auditors
Deloitte & Touche LLP (“Deloitte”) the external auditors of the Company, were responsible for providing services
in connection with the audit of the financial statements of the Group for FY2014.
The Company has put in place a whistle-blowing framework, endorsed by the AC, where employees of the
Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or
other matters and to ensure that arrangements are in place for the independent investigations of such matters
and for appropriate follow up actions. There were no whistle-blowing letters received during FY2014 and as at
the date of this report.
The appointment of the external auditors for the Company, its subsidiaries and associated companies are in
compliance with Rules 712 and 715 of the Listing Manual. None of the AC members is a former partner of the
Group’s existing external auditing firm.
13. INTERNAL AUDIT
Principle 13:
The Company should establish an effective internal audit function that is adequately resourced
and independent of the activities it audits.
The Company outsources its internal audit function. With effect from 24 July 2014, the Company has appointed
Mazars LLP as its internal auditor. Mazars LLP has undertaken reviews in accordance with an internal audit
plan approved by the AC. These reviews were undertaken to assess the effectiveness of the Group’s system
of internal control. The internal auditor reports directly to the AC Chairman, and also reports administratively
to the CEO. Mazars LLP has unfettered access to all the Company’s documents, records, properties and
personnel, including access to the AC. The internal auditor’s scope of work and its internal audit findings
and recommendations, together with Management’s responses were submitted to the AC for review. The
AC approves the hiring, removal, evaluation and compensation of Mazars LLP as the Company’s internal
auditor. Furthermore, at least annually, the AC reviews the adequacy and effectiveness of Mazars LLP as the
Company’s internal audit function.
14. SHAREHOLDER RIGHTS
Principle 14: Companies should treat all shareholders fairly and equitably, and should recognise, protect
and facilitate the exercise of shareholders’ rights, and continually review and update such
governance arrangements.
The Company is committed to establishing a corporate governance culture that promotes fair and equitable
treatment of all shareholders. All shareholders are treated fairly and equitably, and enjoy specific rights under
the Companies Act and the Articles.
These rights include, amongst others, pecuniary rights, for example, the right to participate in profit distributions
and membership rights such as the right to participate in general meetings and the right to exercise their
voting rights. Under Article 65 of the Articles, all shareholders are entitled to attend and vote at the general
meetings by person or proxy. Further, pursuant to Article 71 of the Articles, a shareholder can appoint up to
a maximum of two proxies, who need not be shareholders of the Company, to attend and vote at general
meetings. The Company will consider amending its Articles of Association to allow corporations which provide
nominee or custodial services to appoint more than two proxies so that shareholders who hold shares through
such corporations can attend and participate in general meetings as proxies. Shareholders are given notice of
general meetings with the sufficient notice period as required in the Companies Act, and are informed of the
relevant rules and procedures governing general meetings, including voting procedures. Separate resolutions
are proposed on each substantially separate issue at such general meetings. Shareholders are given the
opportunity to raise questions and participate effectively at such general meetings on any issues that they
may have relating to the resolutions to be passed.
The Company respects the equal information rights of all shareholders and is committed to the practice of fair,
transparent and timely disclosure. All material information and changes in the company or its business which
would be likely to materially affect the price or value of the Company’s shares are disclosed in a timely manner
via SGXNET announcements.
For FY2014, the remunerations in respect of audit services and non-audit services provided by Deloitte for
the Group amounted to approximately RMB1.52million and RMB0.11million, respectively, amounting to an
aggregate remuneration of RMB1.63million. The non-audit services provided were in relation to tax filing of the
Company.
42
AVIC International Maritime Holdings Limited
Annual Report 2014
43
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
15. COMMUNICATIONS WITH SHAREHOLDERS
17. DEALINGS IN SECURITIES
Principle 15: Companies should actively engage their shareholders and put in place an investor relations
policy to promote regular, effective and fair communication with shareholders.
In compliance with the Rule 1207(19) of the Listing Manual, the Company has devised its own internal
compliance code to provide guidance to its officers. Directors and officers of the Company are advised not to
deal in the Company’s shares on short-term considerations or when they are in the possession of unpublished
price-sensitive information.
The Company recognises that effective communication leads to transparency and enhances accountability.
As such, the Company is committed to regular and proactive communication with its shareholders in line with
continuous disclosure obligations of the Company under the Listing Manual.
The Company regularly conveys pertinent information, gathers views or input, and addresses shareholders’
concerns. In this regard, the Company provides timely information to its shareholders via SGXNET announcements,
the Company’s Investor Relations website (http://avicintl.listedcompany.com/home.html) and news releases
and ensures that price-sensitive information is publicly released, and is announced within the mandatory
period. The Company does not practise selective disclosure. In the event there is inadvertent disclosure of
material information that has not been announced, for example in the course of the Company’s interactions
with the investing community, a media release or announcement will be released via SGXNET promptly.
The Company’s general meetings are the forum for dialogue with shareholders and allow the Board and
management to address shareholder questions and concerns. In addition, during the course of FY2014, the
Company conducted 3 investor and/ or publicity meetings during which the Management made presentations
to various local and foreign investors. These meetings provide a forum for management to explain the Group’s
strategy and financial performance. Management also uses meetings with investors and analysts to solicit their
perceptions of the Group.
The Company does not have a concrete dividend policy, and the payment of dividends shall be assessed by
the Board from year to year. The form, frequency and amount of dividends declared each year will take into
account the Group’s profit, growth, cash position, positive cash flow generated from operations, projected
capital requirements of the Group and other factors as the Board may deem appropriate.
16. CONDUCT OF SHAREHOLDER MEETINGS
Principle 16: Companies should encourage greater shareholder participation at general meetings of
shareholders, and allow shareholders the opportunity to communicate their views on various
matters affecting the company.
Shareholders are informed of shareholders’ meeting through notices contained in annual reports or circulars
sent to all shareholders. These notices are also published in the newspaper and posted on the SGXNET. If
shareholders are unable to attend the meeting, the Articles of Association of the Company allow a shareholder
to appoint up to two proxies to attend and vote in place of the shareholder. The participation of shareholders
is encouraged at the Company’s AGM through open question and answer session.
Resolutions at general meetings are, as far as possible, structured separately on each substantially separate
issue and may be voted on independently.
The Directors try, as far as possible, to attend all AGMs. The Chairman of each of the EC, AC, RC and NC will
attend the Company’s AGM to address shareholders’ questions relating to the work of these Committees. The
Company’s external auditors, Deloitte & Touche LLP, will also be invited to attend the AGM and are available
to assist the Directors in addressing any relevant queries by the shareholders relating to the conduct of the
audit and the preparation and content of their auditors’ report.
In accordance with the Code requirements, all resolutions at the general meetings shall be put to vote by
poll. Announcements of the detailed results of voting showing the number of votes cast for and against each
resolution and the respective percentages are also made after each general meeting.
The minutes of the General Meetings are prepared by the Company Secretary and include substantial
comments or queries from shareholders, and responses from the Chairman, the Board and the Management.
These minutes are available to shareholders of the Company at their request.
The Company prohibits dealings in its shares by its officers and employees during the period commencing
two (2) weeks before the announcement of the Company’s financial statements for each of the first three (3)
quarters of its financial year, and one (1) month before the announcement of the Company’s full financial year
results, and ending on the day of the announcement of the relevant results.
18. MATERIAL CONTRACTS
Pursuant to Rule 1207(8) of the Listing Manual, and save as disclosed in this section and in the section referred
to as “Interested Person Transactions” below, neither the Company nor any of its subsidiaries have entered
into any material contract involving the interests of the CEO, each Director or controlling shareholder, which
is subsisting as at 31 December 2014, or if not then subsisting, then entered into since the end of the previous
financial year ended 31 December 2013:
The particulars of the relevant material contracts are set out below.
(a)In connection with the intra-group restructuring (“Proposed Intra-group Restructuring”) as disclosed on
pages 100 and 101 of the Company’s information memorandum dated 10 August 2011 in relation to the
Company’s listing (the “Information Memorandum”), AVIC International Kairong Limited (“AVIC International
Kairong”), the majority shareholder of the Company, desired to fund the Proposed Intra-group Restructuring
by extending an unsecured shareholder’s loan (the “Shareholder’s Loan”) to the Company, pursuant to
which AVIC International Kairong agreed to make available to the Company a loan facility of an aggregate
principal amount of US$24,000,000 (“Principal Sum”) with a loan tenure of three years. The Shareholder’s
Loan was made on terms and conditions of a facility agreement dated 28 August 2012 entered into
between AVIC International Kairong as Lender, and the Company as the Borrower. The Shareholder’s Loan
shall bear an interest rate of 0.85% per annum (“Interest Per Annum”), with the cumulative interest payable
to AVIC International Kairong being US$612,000 (“Cumulative Interest”).
On 28 August 2012 and 2 November 2012, AVIC International Kairong remitted US$15,900,000 and
US$8,100,000 respectively to the Company. The terms of repayment will be negotiated six months before
the end of the loan tenure. For the avoidance of doubt, the Interest Per Annum and the Cumulative Interest
are less than 3% of the Group’s audited net tangible assets as at 31 December 2011.
On 8 April 2013, the Company and AVIC International Kairong entered into a supplementary agreement,
pursuant to which both parties agree that the loan principal amount of USD24,000,000 would be revised to
a Singapore-dollars denominated revised principal amount of SGD29,769,600. The revised principal amount
was determined at the fixed exchange rate of SGD1.2404 against USD1.00. With effect from 1 April 2013, the
principal interest will be computed based on principal amount of SGD29,769,600 instead.
For the purposes of Proposed Intra-group Restructuring, on 20 March 2013, AVIC International Kairong
granted an additional US$3,250,000 interest free loan to AVIC International Ship Development Pte Ltd
(“AISD”), a wholly own subsidiary of the Company with the loan tenure of three years commencing from
20 March 2013.
(b)A deed dated 20 December 2012 was entered into between the Company and AVIC International Kairong
pursuant to which the rights and benefits of AVIC International Kairong under a facility agreement with
Industrial and Commercial Bank of China (Asia) Limited (the “Bank”) in connection with a term loan for a
principal sum of EUR26,000,000 was assigned to the Company. The term loan bears an interest at the rate
of 3.0% per annum and is for a term of three years. Under the deed, the Company also agreed to pay the
Bank such amounts which may be chargeable by the Bank on the terms and conditions as set out under
the said facility agreement. No payment shall be made by the Company to AVIC International Kairong in
connection with the assignment or the facility.
On 20 December 2013, AVIC International Kairong granted the Group an interest-free loan with a principal
amount of EUR2,800,000 for a loan tenure of 6 months commencing from 20 December 2013 for the purposes
of the Company’s repayment of 10% of EUR26,000,000 loan. The EUR26,000,000 term loan and EUR2,800,000
interest-free loan have been fully repaid in December 2014.
44
AVIC International Maritime Holdings Limited
Annual Report 2014
45
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
(c)On November 5, 2014, the company entered into a facility agreement (the “Facility Agreement”) with Bank
of China Limited (the “Bank”), pursuant to which the Bank shall grant the company a revolving credit facility
of SGD45,000,000 (equivalent to RMB209,007,000) at the floating interest rate of 2% per annum over SIBOR.
The loan tenure is three years, maturing on November 5, 2017. The loan was drawn down directly from the
Bank in two tranches on December 18, 2014 and December 26, 2014.The loan is secured by a corporate
guarantee in favour of the Bank from an intermediate holding company, AVIC International Holdings Ltd.
(d)On 26 February 2014, the company’s wholly owned subsidiary, Kaixin Industrial Pte. Ltd. (“Kaixin Industrial”)
entered into a sales and purchase agreement with Catic Beijing, pursuant to which a income of USD70
million (the “Shipbuilding Contract”, before sales taxes and surcharges) is receivable from Catic Beijing for
the construction of 2 Bulk Carriers. It is intended that Catic Beijing will subsequently sell the 2 Bulk Carriers to
a third party. The total income is receivable from Catic Beijing based on the milestone payments received
from Catic Beijing on the sale of the vessels to the third party buyer.
(e)On 28 February 2014, the company’s wholly owned subsidiary, Kaixin Industrial Pte Ltd (“Kaixin Industrial”)
and AVIC Kaixin (Beijing) Ship Industry Co., Ltd (‘Kaixin Beijing”), as co-Buyer, has entered into the ship
construction agreement with Weihai Shipyard for the construction of 2 Bulk Carriers. Pursuant to which the
sub-contract cost of an aggregate amount of USD62.50 million (the “sub-contract cost”, before sales taxes
and surcharges) is payable to Weihai Shipyard by Kaixin Beijing.
19. INTERESTED PERSON TRANSACTIONS
The Group has adopted an internal policy which sets out the procedures for the identification, approval and
monitoring of interested person transactions (“IPTs”). All IPTs are subject to review by the AC. The Company had
on 29 April 2014 obtained its shareholders’ approval for the adoption of the IPT Mandate in respect of certain
categories of transactions that the Group may, in the ordinary course of business, enter into with any member
of the AVIC Group. Save as disclosed below, the following agreements have been entered into pursuant to
the authority conferred under the IPT Mandate in accordance with the guidelines and review procedures for
interested person transactions as disclosed in the IPT Mandate.
Aggregate value of all IPTs during
the financial year under review
(excluding transactions less
than S$100,000 and transactions
conducted under shareholders’
mandate pursuant to Rule 920)(1)
Aggregate value of all IPTs
conducted under shareholders’
mandate pursuant to Rule 920
(excluding transactions less than
S$100,000)(1)
(RMB’000)
(RMB’000)
Service fee income from AVIC
International Beijing Co., Ltd
(“AVIC Beijing”)
931
-
Interest expenses to AVIC
International Kairong Limited (1)
-
1,228
Management fee income from
AVIC DingHeng (2)
-
7,080
Service fee income from AVIC
DingHeng (3)
-
1,735
Ship-designing fee from AVIC
International Kairong Limited (4)
-
2,077
Service fee income from Taizhou
CATIC Shipbuilding Heavy Industry
Limited (5)
-
5,644
Management fee income from
AVIC Zhengjiang Shipyard Marine
Pte Ltd (6)
-
721
Service fee income from AVIC
DingHeng (7)
-
2,667
Service fee income from AVIC
DingHeng (8)
-
3,289
FY2014
46
AVIC International Maritime Holdings Limited
Service fee income from Weihai
Shipyard (9)
-
2,716
Service fee income from Weihai
Shipyard (10)
-
653
Sub-contract cost to Weihai
Shipyard (11)
-
80,764
Steel selling income from AVIC
DingHeng (12)
-
147
Management fee income from
Weihai Shipyard (13)
-
5,339
Service fee income from AVIC
DingHeng (14)
-
1,271
Corporate guarantee fee to
AVIC International Holding
Corporation(15)
-
595
Service fee income from Weihai
Shipyard (16)
-
622
Corporate guarantee fee to AVIC
International Holding Ltd (17)
-
641
Shipbuilding revenue from Catic
Beijing Co., Ltd (18)
-
107,027
Note: (1) For particulars on the loan, please see Section 18(a) on the SGD29,769,600 loan obtained in connection with the Intragroup Restructuring.
(2) AVIC International Ship Development (China) Co., Ltd. (“AISD Shanghai”) a wholly-owned subsidiary, has separately
entered into three (3) service agreements with AVIC Dingheng Shipbuilding Co., Ltd. (“Dingheng Shipyard”) and AVIC
International Shanghai Co., Ltd. (“AVIC International Shanghai”) on 1 October 2013. Pursuant to which the management
fee on an aggregate amount of RMB12,130,000 (“Management Fee”, before sales taxes and surcharges) is payable to
AISD Shanghai from Dingheng Shipyard. Pursuant to the agreement AISD Shanghai is engaged to provide services in
support of vessel construction, export, delivery and import of marine equipment; ship-trading related consultancyservices
in respect of vessel construction, import & export; and other import & export related business and is chargeable by man
hour basis.
(3) AVIC International Ship Development (China) Co., Ltd. (“AISD Shanghai”) a wholly-owned subsidiary, has separately
entered into two (2) service agreements with AVIC Dingheng Shipbuilding Co., Ltd. (“Dingheng Shipyard”) and the
contracts were effective on 3 January 2014 and 17 January 2014 respectively. Pursuant to which the service fee on an
aggregate amount of USD0.41 million and USD0.50 million (“Service fee income”, before sales taxes and surcharges) is
payable to AISD Shanghai from Dingheng Shipyard. Pursuant to the agreement AISD Shanghai is engaged to provide
services in support of vessel construction, export, delivery and import of marine equipment; ship-trading related
consultancy services in respect of vessel construction, import & export; and other import & export related business and
is chargeable by man hour basis.
(4) Deltamarin Ltd, (“Deltamarin”) a 79.57% owned subsidiary has entered into a consultancy, engineering services
agreement with AVIC Beijing on 22 October 2013. Pursuant to which the designing services fee on an aggregate
amount of EUR450,000(approximate RMB3.7million). On 23 October 2013, Deltamarin entered into a supplementary
agreement with AVIC Beijing and AVIC Kairong, pursuant to which AVIC Kairong will act as the coordinator to deal
with communicating and coordinating affairs between AVIC Beijing and Deltamarin, and the amount is payable to
Deltamarin from AVIC Kairong.
(5) AVIC Kaixin (Beijing) Ship Industry Co., Ltd., (“Kaixin Beijing”) a wholly-owned subsidiary of the Company, had on 26
November 2013 entered into an agency agreement with Taizhou CATIC Shipbuilding Heavy Industry Limited (“Taizhou
Shipyard”) and AVIC International Beijing Co.,Ltd. (“AVIC International Beijing”), pursuant to which Kaixin Beijing and
AVIC International Beijing shall act as the co-agent to provide ancillary services for the construction by Taizhou Shipyard
of 8 bulk carriers, at a service fee payable to Kaixin Beijing of USD2.4 million for the four(4) carriers plus RMB12.2 million for
the other four(4) carriers.
Annual Report 2014
47
REPORT ON CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE
(6) AVIC International Offshore (Xiamen) Co., Ltd (“AIOXM”), a wholly-owned subsidiary of the Company, has entered into a
management service agreement (the “Management Agreement”) with AVIC Zhenjiang Shipyard Marine Pte Ltd (“AVIC
Zhenjiang”) on 05 July 2013, pursuant to which the management fee of an aggregate amount of USD0.15 million (the
“Management Fee”, before sales taxes and surcharges) is payable to AIOXM by AVIC Zhenjiang. The management
agreement is for the service period from July 2013 to October 2014 with service to be provided such as on-site supervision/
inspection and management of shipbuilding contracts for three(3) vessels (33m Ramparts 3300AV Class ASD Tugs boat).
(14)AVIC International Ship Development (China) Ltd. (“AISD Shanghai”), a wholly-owned subsidiary of the Company,
has entered into a shipbuilding contract for the construction of two additional 4900DWT Asphalt Carriers with AVIC
International Shanghai Co., Ltd (“AVIC Shanghai”) and AVIC Dingheng Shipbuilding Co., Ltd. (“AVIC DingHeng”),
pursuant to which the agency service of an aggregate amount of USD0.416 million (the “ agency service fee”, before
sales taxes and surcharges) is payable to AISD Shanghai by AVIC DingHeng.
(7) AVIC International Ship Development (China) Ltd. (“AISD Shanghai”), an indirect wholly-owned subsidiary of the
Company, has entered into an agency service agreement with AVIC Dingheng Shipbuilding Co., Ltd. (“AVIC DingHeng”)
for the construction of five(5) plus five(5) optional 25,000DWT Chemical Tankers, pursuant to which the service fee of five
vessels at an aggregate amount of USD3.01 million and five(5) optional vessels amount of USD3.06 million (the “service
fee”, before sales taxes and surcharges) is payable to AISD Shanghai by AVIC DingHeng. Pursuant to the agreement
AISD Shanghai is engaged to provide services in support of vessel construction, export, delivery and import of marine
equipment; ship-trading related consultancy services in respect of vessel construction, import & export; and other import
& export related business.
(8) AVIC International Ship Development (China) Ltd. (“AISD Shanghai”), a wholly-owned of the Company, has entered into
a co-seller agreement with AVIC Dingheng Shipbuilding Co., Ltd. (“AVIC DingHeng”) and AVIC International Shanghai
Co., Ltd. (“AVIC International Shanghai”) for the construction and sell of two(2) plus two(2) optional 15000DWT Chemical
& Oil Tanker , pursuant to which the service fee of an aggregate amount of USD1.03 million (the “service fee”, before
sales taxes and surcharges) is payable to AISD Shanghai by AVIC DingHeng. Pursuant to the agreement AISD Shanghai
is engaged to provide services in support of vessel construction, obtaining the issuance of refund guarantee, collecting
the construction financing services and other import & export related business.
(9) AVIC International Ship Development (China) Co., Ltd. (“AISD Shanghai”)being a wholly-owned subsidiary of the
Company, together with (i) AVIC International Shanghai Co., Ltd. (“AVIC International Shanghai”, a related party) and
(ii) AVIC Weihai Shipyard Co., Ltd. (“Weihai Shipyard”, a related party), entered into a shipbuilding contract for the
construction of two(2) 38,000 DWT Bulk Carriers with a Turkish company, Diler Holding (an independent third party),
pursuant to which AISD Shanghai, AVIC Shanghai and Weihai Shipyard will be the co-sellers and Diler Holding will
be the buyer. The service fee of an aggregate amount of USD1.22 million ( the “service fee”, before sales taxes and
surcharges) is payable to AISD Shanghai by Weihai Shipyard. Pursuant to the agreement AISD Shanghai is engaged to
provide services in support of vessel construction, export, delivery and import of marine equipment; ship-trading related
consultancy services in respect of vessel construction, import & export; and other import & export related business.
(10)AVIC Kaixin (Beijing) Ship Industry Co., Ltd., (“Kaixin Beijing”) a wholly-owned subsidiary of the Company, has entered
into an agency service agreement with AVIC Weihai Shipyard Co., Ltd. (“Weihai Shipyard” a related party) for the
construction of two 81,000DWT bulk carrier, pursuant to which the service fee of an aggregate amount of USD0.55 million
(the “service fee”, before sales taxes and surcharges) is payable to Kaixin Beijing by Weihai shipyard.
(11)AVIC International Beijing Co.,Ltd. (“AVIC International Beijing”), as Seller, has entered into agreement with (i) Kaixin
Industrial Pte Ltd (“Kaixin Industrial”) a wholly owned subsidiary of the Company, as Buyer, and (ii) AVIC Weihai Shipyard
Co., Ltd (“Weihai Shipyard” a related party) as Builder for the construction of two(2) 63,600 DWT Panamax Bulk Carrier
with the total contract price for two vessels of USD70 million. Kaixin Industrial and AVIC Kaixin (Beijing) Ship Industry
Co., Ltd (‘Kaixin Beijing”) a wholly-owned subsidiary of the Company shall then, as co-Buyer, has entered into the ship
construction agreement with Weihai Shipyard for the construction of these two vessels. Pursuant to which the subcontract cost of an aggregate amount of USD62.50 million (the “sub-contract cost”, before sales taxes and surcharges)
is payable to Weihai Shipyard by Kaixin Beijing.
(12)AVIC International Ship Development (China) Ltd. (“AISD Shanghai”), a wholly-owned subsidiary of the Company, has
entered into a steel trading agreement with AVIC Dingheng Shipbuilding Co., Ltd. (“AVIC DingHeng”), pursuant to
which the steel trading income of an aggregate amount of RMB83.27 million (the “service fee”, before sales taxes and
surcharges) is payable to AISD Shanghai by AVIC DingHeng.
(13)AVIC Kaixin (Beijing) Ship Industry Co., Ltd (“Kaixin Beijing”), a wholly-owned subsidiary of the Company, has entered into
the management agreements with AVIC Weihai Shipyard Co., Ltd (“Weihai Shipyard”, a related party), and pursuant
to which the management fee on an aggregate amount of RMB5.04 million (“Management fee”) is payable to Kaixin
Beijing from Weihai Shipyard.
48
AVIC International Maritime Holdings Limited
(15)AVIC International Ship Development (China) Ltd. (“AISD(China)”), a wholly-owned subsidiary of the Company, has
entered into a shipbuilding contract with AVIC International Shanghai Co., Ltd (as the co-seller together with AISD(China))
and Taizhou Kouan Shipbuilding Co., Ltd (as the shipyard), for the construction of eight (8) 64,000 DWT Bulk Carriers, AVIC
International Holding Corporation (“AVIC International”) has provided guarantee/counter-guarantee for AISD(China)
to bank. In return, AISD (China) shall pay to AVIC International a fee of aggregate amount of RMB2.6 million for the
provision of such guarantee/counter-guarantee.
(16)AVIC Kaixin (Beijing) Ship Industry Co., Ltd., (“Kaixin Beijing”) a wholly-owned subsidiary of the Company, has entered
into an agency service agreement with AVIC Weihai Shipyard Co., Ltd. (“Weihai Shipyard” a related party) for the
construction of two 37650DWT bulk carrier, pursuant to which the service fee of an aggregate amount of USD0.42 million
(the “service fee”, before sales taxes and surcharges) is payable to Kaixin Beijing by Weihai shipyard.
(17)AVIC International Maritime Holdings Ltd., (“AIMHL”), has entered into a term loan facility with Bank of China Limited,
Singapore Branch (“BOC SG”) pursuant to which BOC SG shall grant to the Company a loan of SGD45 million for a
term of three years. AVIC International Holdings Limited (“AIHL”/ 161) has agreed to act as guarantor for the Company
to BOC SG. In return, the Company shall pay to AIHL a service fee of 0.30% of the amount guaranteed, which an
aggregate amount of RMB0.64 million is payable to AIHL by AIMHL.
(18)Catic Beijing Co.,Ltd. (“Catic Beijing”), as Buyer, has entered into agreement with (i) Kaixin Industrial Pte Ltd (“Kaixin
Industrial”) a wholly owned subsidiary of the Company, as Seller, for the construction of two(2) 63,600 DWT Panamax Bulk
Carrier with the total contract price for two vessels of USD70 million. Pursuant to which the shipbuilding contract of an
aggregate amount of USD70 million (the “Shipbuilding contract”, before sales taxes and surcharges) is payable to Kaixin
Industrial by Catic Beijing.
Save as disclosed in the table above, the Company did not enter into any IPTs which require disclosure or
shareholders’ approval under SGX-ST Listing Rules regulating IPTs during the financial year ended 31 December 2014.
20. USE OF PROCEEDS RAISED FROM COMPLIANCE PLACEMENT
The Company has raised approximately S$10.6 million from its compliance placement exercise completed on
6 October 2011 (“Compliance Placement”) in relation to the placement of 53,576,000 new shares (“Placement
Shares”) at S$0.285 per Placement Share.
As at the date of the Annual Report, the Group has not started to utilise the total net proceeds of the Compliance
Placement of approximately S$10.6 million (after deducting listing expenses of approximately S$4.7 million
arising from the Compliance Placement) (the “Compliance Placement Proceeds”). On 21 November 2014,
the Board announced that the Company, with the support of the Board and the AC, intends to revise the use
of the Compliance Placement Proceeds so that the total net proceeds of approximately S$10.6 million is to
be allocated for general working capital purposes and any future acquisitions, joint ventures and strategic
alliances. The breakdown of the net proceeds based on the purpose of utilisation, the amount allocated and
the balance outstanding is as follows:
Amount Allocated
(S$ million)
Total Amount
utilised
(S$ million)
Balance
(S$ million)
Working capital and any future acquisitions, joint
ventures and strategic alliances
10.6
-
10.6
Total
10.6
-
10.6
Purpose of utilisation
Annual Report 2014
49
REPORT OF THE DIRECTORS
REPORT OF THE DIRECTORS
The directors present their report together with the audited consolidated financial statements of the group
and statement of financial position and statement of changes in equity of the company for the financial year
ended December 31, 2014.
6
AUDIT COMMITTEE
The Audit Committee of the company, consisting of all non-executive directors, is chaired by Mr Chong
Teck Sin and includes Mr Teng Cheong Kwee and Ms Alice Lai Kuen Kan. The Audit Committee has met four
times since the last Annual General Meeting (“AGM”) and has reviewed the following, where relevant,
with the executive directors and external auditors and internal auditors of the company:
(a)
The external and internal audit plans/audit reports, the scope and results of the internal audit
procedures and results of the internal auditors’ examination and evaluation of the group’s systems
of internal accounting controls;
(b)
The group’s financial and operating results and accounting policies;
(c)
The quarterly and annual announcements as well as the related press releases on the results of the
group and financial position of the company and the group;
(d)
The interested person transactions (if any) falling within the scope of Chapter 9 of the listing manual;
(e)
The co-operation and assistance given by the management to the group’s external auditors and
internal auditors; and
(f)
The re-appointment of the external auditors of the group.
The Audit Committee has full access to and has the co-operation of the management and has been
given the resources required for it to discharge its functions properly. It also has full discretion to invite any
director and executive officer to attend its meetings. The external and internal auditors have unrestricted
access to the Audit Committee.
The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for reappointment as external auditors of the group at the forthcoming AGM of the Company.
1DIRECTORS
The directors of the company in office at the date of this report are:
Diao Weicheng
Teng Cheong Kwee
Chong Teck Sin
Alice Lai Kuen Kan
Wang Puqu
Huang Guang
Sun Yan
Li Meijin
Huang Yongfeng
Wang Mingchuan
Liu Aiyi
(Appointed on March 31, 2014)
(Appointed on March 31, 2014)
(Appointed on March 31, 2014)
(Appointed on March 31, 2014)
2
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES
Neither at the end of the financial year nor at any time during the financial year did there subsist any
arrangement whose object is to enable the directors of the company to acquire benefits by means of the
acquisition of shares or debentures in the company or any other body corporate.
3
DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES
The directors of the company holding office at the end of the financial year had no interests in the share
capital and debentures of the company and related corporations as recorded in the register of directors’
shareholdings kept by the company under Section 164 of the Singapore Companies Act.
4
DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS
Since the beginning of the financial year, no director has received or become entitled to receive a benefit
which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a
contract made by the company or a related corporation with the director or with a firm of which he is a
member, or with a company in which he has a substantial financial interest except for salaries, bonuses
and other benefits as disclosed in the financial statements. Certain directors received remuneration from
related corporations in their capacity as directors and/or executives of those related corporations.
5
The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
ON BEHALF OF THE DIRECTORS
SHARE OPTIONS
a) Options to take up unissued shares
During the financial year, no options to take up unissued shares of the company or any corporation
in the group were granted.
Options exercised
b)
During the financial year, there were no shares of the company or any corporation in the group
issued by virtue of the exercise of an option to take up unissued shares.
Unissued shares under options
c)
50
7AUDITORS
......................................……….......................................……….
Diao Weicheng Sun Yan
April 1, 2015
At the end of the financial year, there were no unissued shares of the company or any corporation
in the group under options.
AVIC International Maritime Holdings Limited
Annual Report 2014
51
STATEMENT OF DIRECTORS
INDEPENDENT AUDITORS’ REPORT
In the opinion of the directors, the consolidated financial statements of the group and statement of financial
position and statement of changes in equity of the company as set out on pages 54 to 105 are drawn up so as
to give a true and fair view of the state of affairs of the group and of the company as at December 31, 2014,
and of the results, changes in equity and cash flows of the group and changes in equity of the company for the
financial year then ended and at the date of this statement, there are reasonable grounds to believe that the
company will be able to pay its debts when they fall due.
Report on the Financial Statements
ON BEHALF OF THE DIRECTORS
TO THE MEMBERS OF AVIC INTERNATIONAL MARITIME HOLDINGS LIMITED
We have audited the accompanying financial statements of AVIC International Maritime Holdings Limited
(the “company”) and its subsidiaries (the “group”) which comprise the consolidated statement of financial
position of the group and the statement of financial position of the company as at December 31, 2014, and the
consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and
statement of cash flows of the group and the statement of changes in equity of the company for the year then
ended, and a summary of significant accounting policies and other explanatory information, as set out on pages
54 to 105.
Management’s Responsibility for the Financial Statements
......................................……….......................................……….
Diao Weicheng
Sun Yan
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial
Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to
provide reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition;
and transactions are properly authorised and that they are recorded as necessary to permit the preparation
of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.
Auditors’ Responsibility
April 1, 2015
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgement, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements
that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the consolidated financial statements of the group and the statement of financial position and
statement of changes in equity of the company are properly drawn up in accordance with the provisions of the
Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the
group and of the company as at December 31, 2014 and of the results, changes in equity and cash flows of the
group and changes in equity of the company for the year ended on that date.
Report on Other Legal and Regulatory Requirements
In our opinion, the accounting and other records required by the Act to be kept by the company and by those
subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with
the provisions of the Act.
Deloitte & Touche LLP
Public Accountants and
Chartered Accountants
Singapore
April 1, 2015
52
AVIC International Maritime Holdings Limited
Annual Report 2014
53
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
STATEMENTS OF FINANCIAL POSITION
December 31, 2014
Group
Company
Note
2014
2013
2014
2013
RMB’000RMB’000RMB’000 RMB’000
Financial year ended December 31, 2014
ASSETS
Current assets
Cash and cash equivalents
7
Pledged cash placed with bank
7
Trade receivables
8
Other receivables
9
Amount due from subsidiaries
10
11
Inventory
Total current assets
208,763
92,475
220,917
79,391
481
602,027
403,234
49,540
109,087
12,399
- - 574,260
10,373
335
2,089
12,797
6,683
165
7,507
- 14,355
Non-current assets
Plant and equipment
12
8,094
7,594
10
52
Goodwill
13
109,203
120,891
- - Intangible assets
14
98,381
96,164
- - Investment in subsidiaries
15
- 393,143
407,854
Investment in associates
16
405
1,060
- - Available-for-sale investments
49
55
- - Deferred tax assets
17
497
557
- - Total non-current assets216,629226,321393,153 407,906
Total assets
818,656
800,581
405,950
422,261
LIABILITIES AND EQUITY
Current liabilities
Short-term loan
18
Current portion of long-term loan
18
Trade payables
19
Advance received
20
Other payables and accruals
21
22
Current portion of finance leases
Income tax payable
Total current liabilities
9,289
136,030
49,905
38,744
85,201
967
1,377
321,513
66,990
30,243
39,103
77,351
1,018
6,836
221,541
136,030
23,174
159,204
66,990
- - 18,221
- - 85,211
Non-current liabilities
Long-term loan
18
228,239309,552209,007 291,032
Finance leases 22
806
838
- - Deferred tax liabilities
17
22,039
26,127
- - Other payables
21
3,735
- - - Total non-current liabilities254,819336,517209,007 291,032
Capital and reserves
Share capital
23
101,237101,237101,237 101,237
24
12,47012,47010,603 10,603
Capital reserve
Statutory reserve
24
11,988
10,209
- Translation reserve
24
10,914
21,231
(4,146)
(2,782)
Accumulated profits (losses)
55,530
42,868
(69,955)
(63,040)
Equity attributable to owners
of the company
192,139
188,015
37,739
46,018
Non-controlling interests Total equity
50,185
242,324
54,508
242,523
37,739
Total liabilities and equity
818,656
800,581
405,950
See accompanying notes to financial statements.
54
AVIC International Maritime Holdings Limited
Note
Revenue
455,058
601,306
Cost of sales
(289,205)
(403,027)
Gross profit 165,853
198,279
25,104
4,264
Marketing and distribution expenses (29,359)
(27,061)
Administrative expenses
(120,527)
(112,819)
Other operating expenses
(528)
(25,975)
Other operating income
25
2014
2013
RMB’000RMB’000
26
Share of loss of associates
16
(378)
(2,173)
Finance costs
27
(15,951)
(13,304)
Profit before income tax
24,21421,211
Income tax expense
28
(7,018)
(15,258)
Profit for the year
29
17,196
5,953
(16,544)
652
22,545
28,498
Owners of the company 14,441
2,120
Non-controlling interests 2,755
3,833
Other comprehensive income:
Item that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations,
representing other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit attributable to:
17,196
5,953
Total comprehensive income attributable to:
Owners of the company 4,083
24,682
Non-controlling interests (3,431)
3,816
652
28,498
Basic and diluted earnings per share (cents)30
5.06
0.74
- 46,018
422,261
See accompanying notes to financial statements.
Annual Report 2014
55
STATEMENTS OF CHANGES IN EQUITY
STATEMENTS OF CHANGES IN EQUITY
Financial year ended December 31, 2014
Financial year ended December 31, 2014
Attributable
Translation
Accumulated
to equity owner
Non-controlling
Share capital
Capital reserve
Statutory reserve
reserve
profits (losses) of the company interests RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
Group
Balance as at January 1, 2013
101,237
10,257
8,094
(1,331)
42,863
161,120
-
Total comprehensive income for the year
Profit for the year
Other comprehensive income (expense)
Total
-
-
-
-
-
-
-
-
-
-
22,562
22,562
2,120
22,562
24,682
3,833
(17)
3,816
5,953
22,545
28,498
-
2,213
50,692
50,692
50,692
52,905
-
2,213
- - -
2,213
-
-
- 2,213
- -
- -
-
-
- 2,213
Transfer to statutory reserve
-
Balance as at December 31, 2013
101,237
161,120
2,120
- 2,120
Transactions with owners, recognised
directly in equity
Deemed contribution by the shareholder
on the shareholder’s loan
(Note 18(2)(iii)(iv))
Non-controlling interest arising from
acquisition of subsidiary
Total
-
Total
equity
RMB’000
2,115
-
(2,115)
-
-
- 12,470
10,209
21,231
42,868
188,015
54,508
242,523
-
-
-
-
-
-
- (10,358)
(10,358)
14,441
- 14,441
14,441
(10,358)
4,083
2,755
(6,186)
(3,431)
17,196
(16,544)
652
Total comprehensive income for the year
Profit for the year
Other comprehensive expense
Total
-
-
Transactions with owners, recognised
directly in equity
Dividends to Non-controlling interests (Note 33)
Total
-
-
-
-
-
-
41
41
- -
41
41
(892)
(892)
(851)
(851)
Transfer to statutory reserve
-
-
1,779
-
(1,779)
-
-
- 101,237
12,470
11,988
10,914
55,530
192,139
50,185
242,324
101,237
10,257
-
(944)
(29,810)
-
-
80,740
Total comprehensive income for the year
Loss for the year
Other comprehensive expense
Total
-
-
-
-
-
-
-
-
-
- (1,838)
(1,838)
(33,230) -
(33,230)
-
- - -
-
-
(33,230)
(1,838)
(35,068)
Transactions with owners’ recognised
directly in equity
Deemed contribution by the shareholder
on the shareholder’s loan
(Note 18(2)(iii)) Total
-
-
346
346
-
-
-
- -
- - -
-
-
346
346
101,237
10,603 -
(2,782)
(63,040)
-
-
46,018
-
-
-
-
-
-
-
-
-
- (1,364)
(1,364)
(6,915)
- (6,915)
-
-
-
-
(6,915)
(1,364)
(8,279)
101,237
10,603 -
(4,146)
(69,955)
-
-
37,739
Balance as at December 31, 2014
Company
Balance as at January 1, 2013
Balance as at December 31, 2013
Total comprehensive income for the year
Loss for the year
Other comprehensive expense
Total
Balance as at December 31, 2014
See accompanying notes to financial statements.
56
AVIC International Maritime Holdings Limited
See accompanying notes to financial statements.
Annual Report 2014
57
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
Financial year ended December 31, 2014
Operating activities
Profit before income tax
Adjustments for:
Share of loss of associates
Depreciation of plant and equipment Amortisation of intangible assets
Plant and equipment written off
Loss on disposal of an associate
Allowance for doubtful debts
Bad debt written off
Provision for foreseeable losses
Interest income
Interest expenses
Net foreign exchange (gain) loss
Gain on disposal of available-for-sale investments
Fair value change of derivative financial instruments
Operating cash flows before movements in working capital
December 31, 2014
2014
RMB’000
24,214
21,211
378
3,565
5,619
57
213
313
- 5,457
(3,086)
11,561
(18,534)
- - 29,757
Trade receivables
Other receivables
Inventories
Trade payables
Advance received
Other payables and accruals
Cash (used in) generated from operations
(136,279)
(68,167)
(481)
23,633
(359)
11,595
(140,301)
Income tax paid
Interest received
Net cash (used in) generated from operating activities
(14,322)
3,086
(151,537)
Investing activities
Purchase of plant and equipment (Note A)
Proceeds from disposal of available-for-sale investments Net cash inflow on acquisition of a subsidiary (Note 31)
Additional investment in an associate
Purchase of intangible assets (Note B)
Net cash (used in) generated from investing activities
(3,380)
(1)
(12,659)
(16,040)
Financing activities
(Repayment of) Proceeds from shareholder’s loan
Interest paid
Repayment of finance lease
New loans raised
Repayment of term loan
Increase in pledged cash placed with bank
Net cash used in financing activities
(21,016)
(6,032)
(1,629)
218,296
(175,105)
(42,935)
(28,421)
Net (decrease) increase in cash and cash equivalents
(195,998)
Cash and cash equivalents at beginning of the year
403,234
Effect of exchange rate changes on the balance of
1,527
cash held in foreign currencies
Cash and cash equivalents at end of the year
208,763
2013
RMB’000
2,173
3,912
3,712
218
1,043
(2,351)
11,571
21,549
(189)
84
62,933
(42,645)
3,842
- (27,768)
15,812
31,798
43,972
1GENERAL
The company (Registration No. 201024137N) is incorporated in Singapore on November 11, 2010 with
its registered office at 10 Collyer Quay, #27-00 Ocean Financial Centre, Singapore 049315 and principal
place of business at 27 - 28th Floor, CATIC Mansion, 212 Jiangning Road, Shanghai 200041, the People’s
Republic of China. The company is listed on the Singapore Exchange Securities Trading Limited (“SGXST”). The financial statements are expressed in Chinese renminbi.
The principal activity of the company is that of investment holding.
The principal activities of its subsidiaries are disclosed in Note 15 to the financial statements.
The consolidated financial statements of the group and the statement of financial position and statement
of changes in equity of the company for the year ended December 31, 2014 were authorised for issue by
the Board of Directors on April 1, 2015.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements are prepared in accordance with the historical cost
basis, except as disclosed in the accounting policies below, and are drawn up in accordance with the
provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).
Historical cost is generally based on the fair value of the consideration given in exchange for goods and
services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price
is directly observable or estimated using another valuation technique. In estimating the fair value of
an asset or a liability, the group takes into account the characteristics of the asset or liability which
market participants would take into account when pricing the asset or liability at the measurement
date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements
is determined on such a basis, except for share-based payment transactions that are within the scope
of FRS 102 Share-based Payment, leasing transactions that are within the scope of FRS 17 Leases, and
measurements that have some similarities to fair value but are not fair value, such as net realisable value
in FRS 2 Inventories or value in use in FRS 36 Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2
or 3 based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, which are described as follows:
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that
the entity can access at the measurement date;
•
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable
for the asset or liability, either directly or indirectly; and
•
Level 3 inputs are unobservable inputs for the asset or liability.
ADOPTION OF NEW AND REVISED STANDARDS - On January 1, 2014, the group adopted all the new and
revised FRSs and Interpretations of FRS (“INT FRS”) that are effective from that date and are relevant to
its operations. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the
group’s and company’s accounting policies and has no material effect on the amounts reported for the
current or prior years except as disclosed below:
New and revised Standards on consolidation, joint arrangements, associates and disclosures
In September 2011, a package of five standards on consolidation, joint arrangements, associates and
disclosures was issued comprising FRS 110 Consolidated Financial Statements, FRS 111 Joint Arrangements,
FRS 112 Disclosure of Interests in Other Entities, FRS 27 (as revised in 2011) Separate Financial Statements
and FRS 28 (as revised in 2011) Investments in Associates and Joint Ventures. Subsequent to the issue of
these standards, amendments to FRS 110, FRS 111 and FRS 112 were issued to clarify certain transitional
guidance on the first-time application of these Standards.
In the current year, the group has applied for the first time FRS 110, FRS 111, FRS 112, FRS 27 (as revised
in 2011) and FRS 28 (as revised in 2011) together with the amendments to FRS 110, FRS 111 and FRS 112
regarding the transitional guidance.
The impact of the application of these Standards is set out below.
(9,109)
2,351
37,214
(3,596)
461
44,346
(1,653)
39,558
43,238
(6,439)
- 200
(21,857)
(41,504)
(26,362)
50,410
355,262
(2,438)
403,234
Note A:
During the year, the group acquired plant and equipment with an aggregate cost of RMB4,857,000
(2013 : RMB3,849,000), of which RMB1,477,000 (2013 : RMB253,000), were acquired by means of finance leases,
and cash payment made amounted to RMB3,380,000 (2013 : RMB3,596,000).
Note B:
During the year, the group acquired intangible assets with an aggregate cost of RMB18,262,000 of which
RMB5,603,000 are to be paid in 3 tranches from 2015 to 2017. Cash payment of RMB12,659,000 were made to
acquire intangible assets.
See accompanying notes to financial statements.
58
AVIC International Maritime Holdings Limited
Annual Report 2014
59
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Impact of the application of FRS 110
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Impact of the application of FRS 112
FRS 110 replaces the parts of FRS 27 Consolidated and Separate Financial Statements that deal with
consolidated financial statements and INT FRS 12 Consolidation – Special Purpose Entities. FRS 110 changes
the definition of control such that an investor has control over an investee when a) it has power over the
investee, b) it is exposed, or has rights, to variable returns from its involvement with the investee and c)
has the ability to use its power to affect its returns. All three of these criteria must be met for an investor to
have control over an investee. Previously, control was defined as the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. Additional guidance has been
included in FRS 110 to explain when an investor has control over an investee. Some guidance included in
FRS 110 that deals with whether or not an investor that owns less than 50% of the voting rights in an investee
has control over the investee is relevant to the group.
FRS 112 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint
arrangements, associates and/or unconsolidated structured entities. In general, the application of FRS
112 has resulted in more extensive disclosures in the consolidated financial statements (please see Notes
15 and 16 for details).
Amendments to FRS 110, FRS 112 and FRS 27 Investment Entities
The amendments to FRS 110 define an investment entity and require a reporting entity that meets the
definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries
at fair value through profit or loss in its consolidated and separate financial statements.
To qualify as an investment entity, a reporting entity is required to:
December 31, 2014
Specifically, the group has a 44.21% ownership interest DeltaLangh Ltd. (“DeltaLangh”), which is
incorporated in Finland. The group’s 44.21% ownership interest in DeltaLangh however gives the group
more than 50% of the voting rights in DeltaLangh. DeltaLangh was incorporated on June 18, 2014 and
there has been no change in the group’s ownership and voting rights in DeltaLangh since then.
The directors of the company made an assessment as at the date of incorporation of DeltaLangh (i.e.
June 18, 2014) as to whether or not the group has control over DeltaLangh in accordance with the new
definition of control and the related guidance set out in FRS 110. The directors concluded that it has had
control over DeltaLangh since the date of incorporation of DeltaLangh on the basis that a) the group has
power over DeltaLangh, b) the group is exposed, or has rights, to variable returns from its involvement with
DeltaLangh and c) the group has the ability to use its power to affect DeltaLangh’s returns. Therefore,
in accordance with the requirements of FRS 110, DeltaLangh Ltd. has been a subsidiary of the company
since June 2014.
December 31, 2014
•
Obtain funds from one or more investors for the purpose of providing them with professional
investment management services;
•
Commit to its investor(s) that its business purpose is to invest funds solely for returns from capital
appreciation, investment income, or both; and
•
Measure and evaluate performance of substantially all of its investments on a fair value basis.
Consequential amendments have been made to FRS 112 and FRS 27 to introduce new disclosure
requirements for investment entities.
The above amendments do not have any effect on the group’s consolidated financial statements as
the company is not an investment entity.
At the date of authorisation of these financial statements, the following new/revised FRSs, INT FRSs and
amendments to FRS that are relevant to the group and the company were issued but not effective:
Other than the above, the group has no control over an investee of which the group owns less than 50%
of the voting rights. Hence, no comparative amounts for 2013 or related amounts as at January 1, 2013 to
be restated or disclosed in accordance with the relevant transitional provisions set out in FRS 110.
Impact of the application of FRS 111
•
FRS 109 Financial Instruments 4
FRS 111 replaces FRS 31 Interests in Joint Ventures, and the guidance contained in a related interpretation,
INT FRS 13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers, has been incorporated
in FRS 28 (as revised in 2011). FRS 111 deals with how a joint arrangement of which two or more parties
have joint control should be classified and accounted for. Under FRS 111, there are only two types of
joint arrangements – joint operations and joint ventures. The classification of joint arrangements under
FRS 111 is determined based on the rights and obligations of parties to the joint arrangements by
considering the structure, the legal form of the arrangements, the contractual terms agreed by the
parties to the arrangement, and, when relevant, other facts and circumstances. A joint operation is a
joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators)
have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is
a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint venturers)
have rights to the net assets of the arrangement. Previously, FRS 31 contemplated three types of joint
arrangements – jointly controlled entities, jointly controlled operations and jointly controlled assets. The
classification of joint arrangements under FRS 31 was primarily determined based on the legal form of the
arrangement (e.g. a joint arrangement that was established through a separate entity was accounted
for as a jointly controlled entity).
•
FRS 115 Revenue from Contracts with Customers 3
•
Amendments to FRS 1 Presentation of Financial Statements: Disclosure Initiative 2
•
Amendments to FRS 27 Separate Financial Statements: Equity Method in Separate Financial
Statements 2
•
Amendments to FRS 16 Property, Plant and Equipment and FRS 38 Intangible Assets: Clarification
of Acceptable Methods of Depreciation and Amortisation 2
•
Amendments to FRS 110 Consolidated Financial Statements and FRS 28 Investments in Associates
and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture 2
•
Improvements to Financial Reporting Standards (January 2014) 1
•
Improvements to Financial Reporting Standards (February 2014) 1
•
Improvements to Financial Reporting Standards (November 2014) 2
1
Applies to annual periods beginning on or after July 1, 2014, with early application permitted.
The initial and subsequent accounting of joint ventures and joint operations is different. Investments
in joint ventures are accounted for using the equity method (proportionate consolidation is no longer
allowed). Investments in joint operations are accounted for such that each joint operator recognises its
assets (including its share of any assets jointly held), its liabilities (including its share of any liabilities incurred
jointly), its revenue (including its share of revenue from the sale of the output by the joint operation) and
its expenses (including its share of any expenses incurred jointly). Each joint operator accounts for the
assets and liabilities, as well as revenues and expenses, relating to its interest in the joint operation in
accordance with the applicable Standards.
2
Applies to annual periods beginning on or after January 1, 2016, with early application permitted.
3
Applies to annual periods beginning on or after January 1, 2017, with early application permitted.
4
Applies to annual periods beginning on or after January 1, 2018, with early application permitted.
Consequential amendments were also made to various standards as a result of these new/revised
standards.
60
The above amendments do not have any effect on the group’s consolidated financial statements as
the group does not have investment in joint arrangements.
AVIC International Maritime Holdings Limited
Annual Report 2014
61
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS
in future periods will not have a material impact on the financial statements of the group and of the
company in the period of their initial adoption except for the following:
When necessary, adjustments are made to the financial statements of the subsidiaries to bring their
accounting policies in line with the group’s accounting policies.
Changes in the group’s ownership interests in existing subsidiaries
Changes in the group’s ownership interests in subsidiaries that do not result in the group losing control
over the subsidiaries are accounted for as equity transactions. The carrying amounts of the group’s
interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in
the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted
and the fair value of the consideration paid or received is recognised directly in equity and attributed to
owners of the company.
When the group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated
as the difference between (i) the aggregate of the fair value of the consideration received and the fair
value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill),
and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in
other comprehensive income in relation to that subsidiary are accounted for as if the group had directly
disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to
another category of equity as specified/permitted by applicable FRSs). The fair value of any investment
retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial
recognition for subsequent accounting under FRS 39, when applicable, the cost on initial recognition of
an investment in an associate or a joint venture.
In the company’s financial statements, investment in subsidiaries and associates are carried at cost less
any impairment in net recoverable value that has been recognised in profit or loss.
BUSINESS COMBINATIONS - Acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. The consideration for each acquisition is measured at the aggregate of the
acquisition date fair values of assets given, liabilities incurred by the group to the former owners of the
acquiree, and equity interests issued by the group in exchange for control of the acquiree. Acquisitionrelated costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a
contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes
in such fair values are adjusted against the cost of acquisition where they qualify as measurement period
adjustments (see below). The subsequent accounting for changes in the fair value of the contingent
consideration that do not qualify as measurement period adjustments depends on how the contingent
consideration is classified. Contingent consideration that is classified as equity is not remeasured at
subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent
consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates
in accordance with FRS 39 Financial Instruments: Recognition and Measurement, or FRS 37 Provisions,
Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being
recognised in profit or loss.
Where a business combination is achieved in stages, the group’s previously held interests in the acquired
entity are remeasured to fair value at the acquisition date (i.e. the date the group attains control) and
the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree
prior to the acquisition date that have previously been recognised in other comprehensive income are
reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
December 31, 2014
FRS 115 Revenue from Contracts with Customers
In November 2014, FRS 115 was issued which establishes a single comprehensive model for entities to
use in accounting for revenue arising from contracts with customers. FRS 115 will supersede the current
revenue recognition guidance including FRS 18 Revenue, FRS 11 Construction Contracts and the related
Interpretations when it becomes effective.
The core principle of FRS 115 is that an entity should recognise revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step
approach to revenue recognition:
•
Step 1: Identify the contract(s) with a customer.
•
Step 2: Identify the performance obligations in the contract.
•
Step 3: Determine the transaction price.
•
Step 4: Allocate the transaction price to the performance obligations in the contract.
•
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
Under FRS 115, an entity recognises revenue when (or as) a performance obligation is satisfied,
i.e. when “control” of the goods or services underlying the particular performance obligation is
transferred to the customer. Far more prescriptive guidance has been added in FRS 115 to deal with
specific scenarios. Furthermore, extensive disclosures are required by FRS 115.
Management is currently evaluating the potential impact of the application of FRS 115 on the financial
statements of the group and of the company in the period of initial application.
BASIS OF CONSOLIDATION - The consolidated financial statements incorporate the financial statements
of the company and entities controlled by the company. Control is achieved when the company:
•
Has power over the investee;
•
Is exposed, or has rights, to variable returns from its involvement with the investee; and
•
Has the ability to use its power to affect its returns.
The company reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
When the company has less than a majority of the voting rights of an investee, it has power over the
investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities
of the investee unilaterally. The company considers all relevant facts and circumstances in assessing
whether or not the company’s voting rights in an investee are sufficient to give it power, including:
December 31, 2014
•
The size of the company’s holding of voting rights relative to the size and dispersion of holdings of
the other vote holders;
•
Potential voting rights held by the company, other vote holders or other parties;
•
Rights arising from other contractual arrangements; and
•
Any additional facts and circumstances that indicate that the company has, or does not have,
the current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders’ meetings.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under the FRS are recognised at their fair value at the acquisition date, except that:
•
Consolidation of a subsidiary begins when the company obtains control over the subsidiary and ceases
when the company loses control of the subsidiary. Specifically, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated statement of profit or loss
and other comprehensive income from the date the company gains control until the date when the
company ceases to control the subsidiary.
Deferred tax assets or liabilities and liabilities or assets related to employee benefit
arrangements are recognised and measured in accordance with FRS 12 Income Taxes and
FRS 19 Employee Benefits respectively;
•
Liabilities or equity instruments related to share-based payment transactions of the acquiree or
the replacement of an acquiree’s share-based payment awards transactions with share-based
payment awards transactions of the acquirer in accordance with the method in FRS 102 Sharebased Payment at the acquisition date; and
Profit or loss and each component of other comprehensive income are attributed to the owners of the
company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to
the owners of the company and to the non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
•
Assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Noncurrent Assets Held for Sale and Discontinued Operations are measured in accordance with that
Standard.
62
AVIC International Maritime Holdings Limited
Annual Report 2014
63
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate
share of the entity’s net assets in the event of liquidation may be initially measured either at fair value
or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s
identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis.
Other types of non-controlling interests are measured at fair value or, when applicable, on the basis
specified in another FRS.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Available-for-sale financial assets
Certain shares and debt securities held by the group are classified as being available-for-sale and
are stated at fair value. Fair value is determined in the manner described in Note 4. Gains and losses
arising from changes in fair value are recognised in other comprehensive income with the exception of
impairment losses, interest calculated using the effective interest method and foreign exchange gains
and losses on monetary assets which are recognised directly in profit or loss. Where the investment is
disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in other
comprehensive income and accumulated in revaluation reserve is reclassified to profit or loss. Dividends
on available-for-sale equity instruments are recognised in profit or loss when the group’s right to receive
payments is established. The fair value of available-for-sale monetary assets denominated in a foreign
currency is determined in that foreign currency and translated at the spot rate at end of the reporting
period. The change in fair value attributable to translation differences that result from a change in
amortised cost of the available-for-sale monetary asset is recognised in profit or loss, and other changes
are recognised in other comprehensive income.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of
impairment at the end of each reporting period. Financial assets are considered to be impaired where
there is objective evidence that, as a result of one or more events that occurred after the initial recognition
of the financial asset, the estimated future cash flows of the investment have been impacted.
For available-for-sale equity instruments, a significant or prolonged decline in the fair value of the
investment below its cost is considered to be objective evidence of impairment.
For all other financial assets, objective evidence of impairment could include:
•
Significant financial difficulty of the issuer or counterparty; or
•
Default or delinquency in interest or principal payments; or
•
It becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be
impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence
of impairment for a portfolio of receivables could include the group’s past experience of collecting
payments, an increase in the number of delayed payments in the portfolio past the average credit
period of 90 days, as well as observable changes in national or local economic conditions that correlate
with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between
the asset’s carrying amount and the present value of estimated future cash flows, discounted at the
original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial
assets with the exception of trade receivables where the carrying amount is reduced through the use of
an allowance account. When a trade receivable is uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
December 31, 2014
If the initial accounting for a business combination is incomplete by the end of the reporting period
in which the combination occurs, the group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted during the measurement period
(see below), or additional assets or liabilities are recognised, to reflect new information obtained about
facts and circumstances that existed as of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the group obtains
complete information about facts and circumstances that existed as of the acquisition date and is
subject to a maximum of one year from acquisition date.
The policy described above is applied to all business combinations that take place on or after
January 1, 2010.
FINANCIAL INSTRUMENT - Financial assets and financial liabilities are recognised on the group’s statement
of financial position when the group becomes a party to the contractual provisions of the instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument
and of allocating interest income or expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash receipts or payments (including all fees on points
paid or received that form an integral part of the effective interest rate, transactions costs and other
premiums or discounts) through the expected life of the financial instrument, or where appropriate, a
shorter period. Income and expense is recognised on an effective interest basis for debt instruments
other than those financial instruments at “fair value through profit or loss”.
Financial assets
All financial assets are recognised and de-recognised on a trade date basis where the purchase or
sale of an investment is under a contract whose terms require delivery of the investment within the
timeframe established by the market concerned, and are initially measured at fair value plus transaction
costs, except for those financial assets classified as at fair value through profit or loss which are initially
measured at fair value.
Financial assets are classified into the following specified categories: financial assets “at fair value
through profit or loss”, “held-to-maturity investments”, “available-for-sale financial assets” and “loans
and receivables”. The classification depends on the nature and purpose of financial assets and is
determined at the time of initial recognition. The group does not have financial assets at fair value
through profit or loss and held-to-maturity investments.
Loans and receivables
Trade receivables and other receivables that have fixed or determinable payments that are not quoted
in an active market are classified as “loans and receivables”. Loans and receivables (including trade
and other receivables and bank balances and cash) are measured at amortised cost using the effective
interest method less impairment. Interest is recognised by applying the effective interest method, except
for short-term receivables when the effect of discounting is immaterial.
December 31, 2014
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively to an event occurring after the impairment
was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent
that the carrying amount of the financial asset at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been recognised.
When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses
previously recognised in other comprehensive income are reclassified to profit or loss.
In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or
loss are not reversed through profit or loss. Any subsequent increase in fair value after an impairment
loss is recognised in other comprehensive income and accumulated under the heading of investments
revaluation reserves. In respect of available-for-sale debt securities, impairment losses are subsequently
reversed through profit or loss if an increase in the fair value of the investment can be objectively related
to an event occurring after the recognition of the impairment loss.
64
AVIC International Maritime Holdings Limited
Annual Report 2014
65
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
When contract costs incurred to date plus recognised profits less recognised losses exceed progress
billings, the surplus is shown as amounts due from customers for contract work. For contracts where
progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the
surplus is shown as amounts due to customers for contract work. Amounts received before the related
work is performed are included in the consolidated statement of financial position, as a liability, as
amounts due to construction contracts customers. Amounts billed for work performed but not yet paid
by the customer are included in the consolidated statement of financial position under trade and other
receivables.
LEASES – Leases are classified as finance leases whenever the terms of the lease transfer substantially all
the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The group as lessee
Assets held under finance leases are recognised as assets of the group at their fair value at the inception
of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to
the lessor is included in the statement of financial position as a finance lease obligation. Lease payments
are apportioned between finance charges and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directly
to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised
in accordance with the group’s general policy on borrowing costs (see below). Contingent rentals are
recognised as expenses in the periods in which they are incurred.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term
of the relevant lease unless another systematic basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed. Contingent rentals arising under operating
leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are
recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental
expense on a straight-line basis, except where another systematic basis is more representative of the
time pattern in which economic benefits from the leased asset are consumed.
December 31, 2014
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Derecognition of financial assets
The group derecognises a financial asset only when the contractual rights to the cash flows from the
asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of
the asset to another entity. If the group neither transfers nor retains substantially all the risks and rewards
of ownership and continues to control the transferred asset, the group recognises its retained interest in
the asset and an associated liability for amounts it may have to pay. If the group retains substantially all
the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the
financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the group are classified according to the substance
of the contractual arrangements entered into and the definitions of a financial liability and an equity
instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the group after
deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct
issue costs.
Financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are
subsequently measured at amortised cost, using the effective interest method, with interest expense
recognised on an effective yield basis.
Interest-bearing loans are initially measured at fair value, and are subsequently measured at amortised
cost, using the effective interest method. Any difference between the proceeds (net of transaction
costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in
accordance with the group’s accounting policy for borrowing costs (see below).
Derecognition of financial liabilities
The group derecognises financial liabilities when, and only when, the group’s obligations are discharged,
cancelled or they expire.
Offsetting arrangements
Financial assets and financial liabilities are offset and the net amount presented in the statement of
financial position when the company and the group has a legally enforceable right to set off the
recognised amounts; and intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously. A right to set-off must be available today rather than being contingent on a
future event and must be exercisable by any of the counterparties, both in the normal course of business
and in the event of default, insolvency or bankruptcy.
CONSTRUCTION CONTRACTS – Where the outcome of a construction contract can be estimated reliably,
revenue and costs are recognised by reference to the stage of completion of the contract activity at
the end of the reporting period, as measured by reference to the physical proportion of the contract
work completed as determined by a qualified engineer’s estimates for ship building contracts, or by
the proportion that contract costs incurred for work performed to date relative to the estimated total
contract costs for Engineering, Procurement and Construction (“EPC”) contracts. Variations in contract
work, claims and incentive payments are included to the extent that the amount can be measured
reliably and its receipt is considered probable.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is
recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs
are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is
recognised as an expense immediately.
66
December 31, 2014
AVIC International Maritime Holdings Limited
INVENTORIES - Inventories are stated at the lower of cost and net realisable value. Cost comprises direct
materials and, where applicable, direct labour costs and those overheads that have been incurred in
bringing the inventories to their present location and condition. Cost is calculated using the weighted
average method. Net realisable value represents the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling and distribution.
PLANT AND EQUIPMENT - Plant and equipment are stated at cost less accumulated depreciation and
any accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives,
using the straight-line method, on the following bases:
Office equipment
Computer
Motor vehicles
Renovation
Furniture and fixtures
Number of years
3
3
10
3 to 6
3
The estimated useful lives, residual values and depreciation method are reviewed at each year end,
with the effect of any changes in estimate accounted for on a prospective basis. During the financial
year, management estimated the useful lives of motor vehicles to be 10 years instead of 5 years, and the
useful lives of certain renovation items to be 6 years instead of 3 years, to reflect the pattern of economic
benefits to be derived from those assets, as further disclosed in Note 3 to the financial statements.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as
owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term,
the asset shall be fully depreciated over the shorter of the lease term and its useful life.
Annual Report 2014
67
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognised in profit
or loss.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment annually, and whenever there is an indication that the asset may be impaired.
Fully depreciated assets are retained in the book of accounts until they are no longer in use.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss
is recognised immediately in profit or loss.
Intangible assets with indefinite useful lives are tested for impairment annually, and whenever there is an
indication that the asset may be impaired.
ASSOCIATES - An associate is an entity over which the group has significant influence and that is neither a
subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial
and operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these consolidated financial
statements using the equity method of accounting, except when the investment, or a portion thereof, is
classified as held for sale, in which case it is accounted for in accordance with FRS 105. Under the equity
method, an investment in an associate is initially recognised in the consolidated statement of financial
position at cost and adjusted thereafter to recognise the group’s share of the profit or loss and other
comprehensive income of the associate. When the group’s share of losses of an associate exceeds the
group’s interest in that associate (which includes any long-term interests that, in substance, form part of
the group’s net investment in the associate), the group discontinues recognising its share of further losses.
Additional losses are recognised only to the extent that the group has incurred legal or constructive
obligations or made payments on behalf of the associate.
An investment in an associate is accounted for using the equity method from the date on which the
investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost
of the investment over the group’s share of the net fair value of the identifiable assets and liabilities of
the investee is recognised as goodwill, which is included within the carrying amount of the investment.
Any excess of the group’s share of the net fair value of the identifiable assets and liabilities over the cost
of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the
investment is acquired.
The requirements of FRS 39 are applied to determine whether it is necessary to recognise any impairment
loss with respect to the group’s investment in an associate. When necessary, the entire carrying amount
of the investment (including goodwill) is tested for impairment in accordance with FRS 36 Impairment of
Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less
costs to sell) with its carrying amount, any impairment loss recognised forms part of the carrying amount
of the investment. Any reversal of that impairment loss is recognised in accordance with FRS 36 to the
extent that the recoverable amount of the investment subsequently increases.
December 31, 2014
GOODWILL - Goodwill arising in a business combination is recognised as an asset at the date that control
is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s
previously held equity interest (if any) in the entity over net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed.
If, after reassessment, the group’s interest in the fair value of the acquiree’s identifiable net assets
exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the
excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment
testing, goodwill is allocated to each of the group’s cash-generating units expected to benefit from the
synergies of the combination. Cash-generating units to which goodwill has been allocated are tested
for impairment annually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary or the relevant cash generating unit, the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
INTANGIBLE ASSETS
Intangible assets acquired separately
Intangible assets acquired separately are reported at cost less accumulated amortisation (where they
have finite useful lives) and accumulated impairment losses. Intangible assets with finite useful lives
are amortised on a straight-line basis over their estimated useful lives. The estimated useful life and
amortisation method are reviewed at the end of each annual reporting period, with the effect of any
changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful
lives are not amortised. Each period, the useful lives of such assets are reviewed to determine whether
events and circumstances continue to support an indefinite useful life assessment for the asset. Such
assets are tested for impairment in accordance with the policy below.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are identified and recognised separately from
goodwill. The cost of such intangible assets is their fair value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at
cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible
assets acquired separately.
The intangible assets have finite useful lives except for branding, over which the assets are amortised.
The amortisation period for technical knowhow is 15 years. Ship design engineering software licenses are
amortised over their estimated useful lives, which is on average 5 years.
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL - At the end of each reporting
period, the group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss
(if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group
estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they are allocated to the smallest group of cashgenerating units for which a reasonable and consistent allocation basis can be identified.
68
AVIC International Maritime Holdings Limited
December 31, 2014
Annual Report 2014
69
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
The group discontinues the use of the equity method from the date when the investment ceases to be
an associate, or when the investment is classified as held for sale. When the group retains an interest
in the former associate and the retained interest is a financial asset, the group measures the retained
interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in
accordance with FRS 39. The difference between the carrying amount of the associate at the date
the equity method was discontinued, and the fair value of any retained interest and any proceeds
from disposing of a part interest in the associate is included in the determination of the gain or loss on
disposal of the associate. In addition, the group accounts for all amounts previously recognised in other
comprehensive income in relation to that associate on the same basis as would be required if that
associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously
recognised in other comprehensive income by that associate would be reclassified to profit or loss on
the disposal of the related assets or liabilities, the group reclassifies the gain or loss from equity to profit or
loss (as a reclassification adjustment) when the equity method is discontinued.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Shipbuilding revenue
Revenue from shipbuilding contracts is recognised based on the percentage of completion method.
The percentage of completion is measured by reference to the percentage of the physical proportion
of the contract work completed as determined by a qualified engineer’s estimates.
Service fee income
Service fee income generated from the provision of project management and consultancy services
relating to shipbuilding, which cover ship design and construction (both of which are outsourced to third
parties), procurement, new building management and marine finance is recognised by reference to
the stage of completion in accordance with the following milestones: (i) contract being effective; (ii)
steel cutting; (iii) keel laying; (iv) launching; and (v) delivery of vessel. The percentage of completion is
computed by using time proportion method, taking into consideration the milestones mentioned above.
Management service fee
Management service fee is recognised when services are rendered which include management and
services rendered with respect to marketing and consulting activities.
Ship-design fee income
Ship-design fee income generated from consulting, design and engineering services to marine and
offshore industries. The group has two main kinds of contract types: fixed price contracts and cost
plus contracts. Revenue from fixed price contracts is recognised by reference to the percentage of
completion which is assessed on the basis of the actual working hours performed as a proportion of the
total working hours to be performed. Revenue from cost plus contracts is recognised in the period the
work is performed based on time and material used.
Engineering, Procurement and Construction (“EPC”) revenue
Revenue from EPC contracts is recognised based on the percentage of completion method. The
percentage of completion is measured by the proportion that contract costs incurred for work performed
to date relative to the estimated total contract costs.
Other income – steel trading
Income from steel trading is recognised in different ways depending on whether the entity is acting as a
principal or an agent in the contractual arrangement. When the entity is a principal in the contractual
arrangement, income from steel trading is recognised when all the following conditions are satisfied:
December 31, 2014
When the group reduces its ownership interest in an associate but the group continues to use the equity
method, the group reclassifies to profit or loss the proportion of the gain or loss that had previously been
recognised in other comprehensive income relating to that reduction in ownership interest if that gain or
loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate of the group, profits and losses resulting from the
transactions with the associate are recognised in the group’s consolidated financial statements only to
the extent of interests in the associate that are not related to the group.
PROVISIONS - Provisions are recognised when the group has a present obligation (legal or constructive)
as a result of a past event, it is probable that the group will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement
will be received and the amount of the receivable can be measured reliably.
December 31, 2014
Provision for foreseeable losses on contracts is made when the unavoidable costs of meeting the
obligations under these contracts exceed the economic benefits expected to be received from them.
•
The entity has transferred to the buyer the significant risks and rewards of ownership of the goods;
•
The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
• The amount of revenue can be measured reliably;
GOVERNMENT GRANTS - Government grants are not recognised until there is reasonable assurance that
the group will comply with the conditions attaching to them and the grants will be received. The benefits
of a government loan at a below-market rate of interest is treated as a government grant, measured as
the difference between proceeds received and the fair value of the loan based on prevailing market
interest rates. Government grants whose primary condition is that the group should purchase, construct
or otherwise acquire non-current assets are recognised as deferred income in the statement of financial
position and transferred to profit or loss on a systematic and rational basis over the useful lives of the
related assets.
Other government grants are recognised as income over the periods necessary to match them with
the costs for which they are intended to compensate on a systematic basis. Government grants that
are receivable as compensation for expenses or losses already incurred or for the purpose of giving
immediate financial support to the group with no future related costs are recognised in profit or loss in
the period in which they become receivable.
REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received or
receivable for sale of goods and rendering of services provided in the normal course of business, net of
discounts and sales related taxes.
70
AVIC International Maritime Holdings Limited
• It is probable that the economic benefits associated with the transaction will flow to the entity; and
•
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
When the entity is an agent in the contractual arrangement, only net commission income from the steel
trading is recognised when the services are rendered.
Interest income
Interest income from a financial institution is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the
estimated future cash receipts through expected life of the financial asset to that asset’s net carrying
amount on initial recognition.
BORROWING COSTS - Borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use or sale, are added to the cost of those assets, until such time as the assets are substantially
ready for their intended use or sale. Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible
for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Annual Report 2014
71
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plans are charged as
an expense when employees have rendered the services entitling them to the contributions. Payments
made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are
dealt with as payments to defined contribution plans where the group’s obligations under the plans are
equivalent to those arising in a defined contribution retirement benefit plan.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period. Except for investment properties measured using the fair
value model, the measurement of deferred tax liabilities and assets reflect the tax consequences that
would follow from the manner in which the group expects, at the end of the reporting period, to recover
or settle the carrying amount of its assets and liabilities.
Pursuant to the relevant regulations of the People’s Republic of China (“PRC”) government, the
PRC subsidiary of the group (the “PRC Subsidiary”) has participated in central pension schemes (the
“Schemes”) operated by local municipal governments whereby the PRC Subsidiary is required to
contribute a certain percentage of the basic salaries of their employees to the Schemes to fund their
retirement benefits. The local municipal governments undertake to assume the retirement benefit
obligations of all existing and future retired employees of the PRC Subsidiary. The only obligation of
the PRC Subsidiary with respect to the Schemes is to pay the ongoing required contributions under the
Schemes mentioned above. Contributions under the Schemes are charged as expenses when incurred.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred taxes are recognised as an expense or income in profit or loss, except when they
relate to items credited or debited outside profit or loss (either in other comprehensive income or directly
in equity), in which case the tax is also recognised outside profit or loss (either in other comprehensive
income or directly in equity, respectively), or where they arise from the initial accounting for a business
combination. In the case of a business combination, the tax effect is taken into account in calculating
goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over cost.
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION - The individual financial statements of each
group entity are measured and presented in the currency of the primary economic environment in
which the entity operates (its functional currency). The consolidated financial statements of the group
and the statement of financial position of the company are presented in Chinese renminbi (“RMB”). The
functional currency of the company is Singapore dollar (“SGD”). The management believes that RMB
will be better reflecting the underlying transactions and balances the group has.
In preparing the financial statements of the individual entities, transactions in currencies other than
the entity’s functional currency are recorded at the rate of exchange prevailing on the date of the
transaction. At the end of each reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the end of each reporting period. Non-monetary items carried at
fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date
when the fair value was determined. Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary
items are included in profit or loss for the period. Exchange differences arising on the retranslation of
non-monetary items carried at fair value are included in profit or loss for the period except for differences
arising on the retranslation of non-monetary items in respect of which gains and losses are recognised
other comprehensive income. For such non-monetary items, any exchange component of that gain or
loss is also recognised in other comprehensive income.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the company
(including comparatives) are expressed in RMB using exchange rates prevailing at the end of each
reporting period. Income and expense items (including comparatives) are translated at the average
exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which
case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in the group’s translation reserve.
On the disposal of a foreign operation (i.e. a disposal of the group’s entire interest in a foreign operation,
or a disposal involving loss of control over a subsidiary that includes a foreign operation, or loss of
significant influence over an associate that includes a foreign operation), all of the accumulated
exchange differences in respect of that operation attributable to the group are reclassified to profit
or loss. Any exchange differences that have previously been attributed to non-controlling interests are
derecognised, but they are not reclassified to profit or loss.
In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation,
the proportionate share of accumulated exchange differences are re-attributed to non-controlling
interests and are not recognised in profit or loss. For all other partial disposals (i.e. of associates that do not
result in the group losing significant influence), the proportionate share of the accumulated exchange
differences is reclassified to profit or loss.
December 31, 2014
Pursuant to the relevant regulations of the Finland government, the Finland subsidiary of the group (the
“Finland Subsidiary”) has participated in statutory earnings-related pension schemes (the “Schemes”)
managed by licensed not-for-profit pension insurance companies (the “PICs”) under the government’s
monitor whereby the Finland Subsidiary is required to contribute a certain percentage of the basic salaries
of their employees to the Schemes to fund their retirement benefits. The PICs undertake to assume the
retirement benefit obligations of all existing and future retired employees of the Finland Subsidiary. The
only obligation of the Finland Subsidiary with respect to the Schemes is to pay the ongoing required
contributions under the Schemes mentioned above. Contributions under the Schemes are charged as
expenses when incurred.
EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised when they
accrue to employees. A provision is made for the estimated liability for annual leave as a result of services
rendered by employees up to the end of the reporting period.
INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as
reported in the statement of profit or loss and other comprehensive income because it excludes items of
income or expense that are taxable or deductible in other years and it further excludes items that are not
taxable or tax deductible. The group’s liability for current tax is calculated using tax rates (and tax laws)
that have been enacted or substantively enacted in countries where the company and subsidiaries
operate by the end of each reporting period.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets and liabilities are not recognised
if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
72
Deferred tax liabilities are recognised on taxable temporary differences arising on investments in
subsidiaries and associates, except where the group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and
interests are only recognised to the extent that it is probable that there will be sufficient taxable profits
against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part
of the asset to be recovered.
AVIC International Maritime Holdings Limited
December 31, 2014
Annual Report 2014
73
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3
On consolidation, exchange differences arising from the translation of the net investment in foreign
entities (including monetary items that, in substance, form part of the net investment in foreign entities),
are recognised in other comprehensive income and accumulated in a separate component of equity
under the header of translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as
assets and liabilities of the foreign operation and translated at the closing rate.
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS - Cash and cash equivalents in the
statement of cash flows comprise cash held at banks and demand deposits that are readily convertible
to a known amount of cash and are subject to an insignificant risk of changes in value.
3
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the group’s accounting policies, which are described in Note 2, management is
required to make judgements, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
December 31, 2014
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future
periods.
Critical judgements in applying the group’s accounting policies
The following are the critical judgements, apart from those involving estimations (see below), that
management has made in the process of applying the group’s accounting policies and that have the
most significant effect on the amounts recognised in the financial statements.
Revenue recognition
1)
2)
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end
of the reporting period, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are discussed below.
Income taxes
(a)
AVIC International Maritime Holdings Limited
Tax currently payable
The group has exposure to income taxes mainly in the People’s Republic of China and Finland.
Significant judgement is involved in determining the group’s provision for income taxes. There
are certain transactions and computations for which the ultimate tax determination is uncertain
during the ordinary course of business. The group recognises liabilities for expected tax issues
based on estimates on whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recognised, such differences will impact
the income tax provisions in the period in which such determination is made. The carrying amount
of the group’s income tax payable at December 31, 2014 is RMB1,377,000 (2013 : RMB6,836,000).
(b)
Deferred tax
The group reviews the carrying amount of deferred tax at the end of each reporting period.
Deferred tax is recognised to the extent that it is probable that the temporary differences can
be utilised or there is future taxable profit available against which the temporary differences
can be utilised. This involves judgement regarding the future performance and tax laws. The
carrying amounts of the deferred tax assets and liabilities are disclosed in Note 17 to the financial
statements.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cashgenerating units to which goodwill has been allocated. The value in use calculation requires the entity to
estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount
rate in order to calculate present value. The carrying amount of goodwill at the end of the reporting
period was RMB109,203,000 (2013 : RMB120,891,000) as disclosed in Note 13 to the financial statements.
No impairment loss (2013 : RMBNil) was recognised during the financial year.
Impairment of intangible assets
During the financial year ended December 31, 2014, management has performed impairment
assessment on the recoverable amount of its intangible assets.
Ship-design fee income
The group uses the percentage of completion method in accounting for its fixed price contracts
to deliver design services. Use of the percentage of completion method requires the group to
estimate the services performed to date as a proportion of the total services to be performed.
74
The fixed price contracts may include revenue streams from designing work and licensing
arrangements. Revenue for licensing service is recognised when the amount of revenue can be
estimated reliably and the inflow of economic benefit is probable. Management uses judgement in
determining when revenue recognition criteria are fulfilled. The management evaluates reliability
and probability of the revenue by considering its past experience (sufficient evidence of similar
agreements), historic trends and factors specific to the structure, geographical location, historical
reputation and existence of the time chartering agreement. Revenue from total ship-design fees
contracts is disclosed in Note 25 to the financial statements.
Service fee income
The group recognises service fee income by reference to the stage of completion in accordance
with the following milestones (i) contract being effective; (ii) steel cutting; (iii) keel laying;
(iv) launching; and (v) delivery of vessel. The percentage of completion is computed by using
time proportion method, taking into consideration the milestones as mentioned above. Significant
judgement is required in estimating the period of time from the date of contract being effective to
the date of delivery of vessel which affects the service fee income recognised to-date based on
the percentage of completion. In making its judgement, the group relies on past experience and
the work of specialists. Revenue from service fee contracts is disclosed in Note 25 to the financial
statements.
3)
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (cont’d)
Shipbuilding revenue and Engineering, Procurement and Construction (“EPC”) revenue
The group recognises shipbuilding revenue and EPC revenue based on the percentage of
completion method. The stage of completion is measured in accordance with the accounting
policy stated in Note 2. Significant assumptions are required in determining the stage of completion,
the extent of the contract cost incurred, the estimated total contract revenue and contract cost
and the recoverability of the contracts. In making the assumption, the group evaluates by relying
on past experience and the work of engineers. Revenue from shipbuilding contracts is disclosed in
Note 25 to the financial statements.
December 31, 2014
(a)
The group has amortised the ship design engineering software licenses and technical knowhow with
a charge amounting to RMB5,619,000 (2013 : RMB3,712,000) in accordance to their useful lives.
(b)
Branding is not expected to cease bringing economic benefits to the group and registration of
the brand name is expected continuously renewed. Therefore, management is of the view that
the useful economic life of the branding is estimated to be indefinite.
Management is confident that the carrying amount of the remaining intangible assets as at December 31,
2014 will be recovered in full. However, this situation will be closely monitored, and adjustments will be
made in future periods, if future market activity indicates that such adjustments are appropriate. The
carrying amount of intangible assets is disclosed in Note 14 to the financial statements.
Annual Report 2014
75
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
3
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (cont’d)
Allowance for impairment loss on trade and other receivables
4
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)
(c)
Financial risk management policies and objectives
Management assesses at the end of each reporting period whether there is any objective evidence that
trade and other receivables are impaired. If there is objective evidence that an impairment loss on trade
and other receivables has been incurred, the amount of loss is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows. The amount of loss
is recognised in profit or loss. Where the loss subsequently reverses, the reversal is recognised in profit
or loss. As at December 31, 2014, the carrying amount of trade receivables was RMB59,917,000 (2013 :
RMB77,971,000), net of allowance for doubtful debts of RMB313,000 (2013 : RMBNil) as disclosed in Note
8 to the financial statements.
The group does not hold or issue derivative financial instruments for speculative purposes.
December 31, 2014
December 31, 2014
Provision for foreseeable losses
Judgement is exercised in determining foreseeable losses on construction contracts. In making judgement,
the group evaluates by relying on past experience and cost estimates. Significant estimate is required in
assessing the cost estimates based on suppliers’ quotations or engineers’ estimates.
For the year ended December 31, 2014, a provision for foreseeable losses amounted to RMB5,457,000
(2013 : RMBNil) was made and management is of the view that the provision is adequate.
Useful lives of plant and equipment
As described in Note 2, the group reviews the estimated useful lives of plant and equipment at the end
of each annual reporting period. During the financial year, management determined to extend the
useful lives of motor vehicles from 5 years to 10 years, and the useful lives of certain renovation items from
3 years to 6 years, due to the management’s intention to use the assets for a longer period of time. The
financial effect of this reassessment, assuming the assets are held until the end of their estimated useful
lives, is to decrease the consolidated depreciation expense in the current financial year by RMB518,000.
The management of the group monitors and manages the financial risks relating to the operations
of the group to ensure appropriate measures are implemented in a timely and effective manner.
These risks include market risk (foreign exchange risk and interest rate risk), credit and liquidity risk.
There has been no change to the group’s exposure to these financial risks or the manner in which
it manages and measures the risk. Market risk exposures are measured using sensitivity analysis
indicated below.
(i) Foreign exchange risk management
Foreign currency risk occurs as a result of the group’s transactions that are not denominated in
the entities’ respective functional currencies. These transactions arise from the group’s ordinary
course of business. The group transacts business in various currencies and the most significant
currency exposure is in United States dollars, Singapore dollars, Euro and Chinese renminbi.
At the end of the reporting period, the carrying amounts of significant monetary assets and
monetary liabilities denominated in currencies other than the respective group entities’
functional currencies are as follows:
Group
United States dollars
4
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT
(a) Categories of financial instruments
Group
Financial assets
Loans and receivables (including
cash and cash equivalents)
Available-for-sale financial assets
Financial liabilities
Amortised cost
2013
RMB’000
2014
RMB’000
2013
RMB’000
543,611
567,647
12,462
14,190
49
543,660
55
567,702
12,462
14,190
461,649
368,211
376,243
The group and company do not have any financial instruments which are subject to enforceable master netting arrangement and similar arrangements.
76
AVIC International Maritime Holdings Limited
2013
2014
2013
2014
2013
2014
2013
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
4,706
658
97,825
153,170
-
658
629
6,125
181
-
1,591
853
-
-
-
-
Euro
906
223,565
797
1,362
-
223,565
789
301
-
23
1,963
669
-
-
13
13
The following table details the sensitivity to a 10% increase and decrease in the relevant foreign
currencies against the functional currency of each group entity. 10% is the sensitivity rate used
when reporting foreign currency risk internally to key management personnel and represents
management’s assessment of the reasonably possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency denominated monetary items
and adjusts their translation at the period end for a 10% change in foreign currency rates.
If the relevant foreign currency weakens by 10% against the functional currency of each group
entity, profit or loss will increase (decrease) by:
(b) Financial instruments subject to offsetting
Assets
2014
507,408
Liabilities
Foreign currency sensitivity
Company
2014
RMB’000
Assets
Singapore dollars
Chinese renminbi
The following table sets out the financial instruments as at the end of the reporting period:
Company
Liabilities
Group
Profit or loss
Company
Profit or loss
United States
dollars impact
2014
2013
RMB’000
Singapore
dollars impact
2014
2013
Euro
impact
2014
2013
Chinese
renminbi impact
2014
2013
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000 RMB’000
RMB’000
(9,312) (15,251)
(141)
(85)
11
22,220
(196)
(65)
- - (79)
22,326
(1)
(1)
(63)
(547)
Annual Report 2014
77
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
4
4
December 31, 2014
December 31, 2014
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)
If the relevant foreign currency strengthens by 10% against the functional currency of each
group entity, profit or loss will increase (decrease) by:
United States
dollars impact
2014
2013
RMB’000 RMB’000 RMB’000
Group
Profit or loss 9,312
Company
Profit or loss
(ii)
Singapore
dollars impact
2014
2013
63
RMB’000
Euro
impact
2014
2013
Chinese
renminbi impact
2014
2013
RMB’000 RMB’000 RMB’000
RMB’000
15,251
141
85
(11) (22,220)
196
65
547
- - 79 (22,326)
1
1
Interest rate risk management
The group’s exposure to changes in interest rates relates primarily to the group’s fixed
deposits with banks and debt obligations. The group does not use derivative financial
instruments to hedge its risks and the details of the group’s interest rate exposure is disclosed
in Notes 7 and 18 to the financial statements.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to interest
rates for both derivatives and non-derivative instruments at the end of the reporting period
and the stipulated change taking place at the beginning of the financial year and held
constant throughout the reporting period in the case of instruments that have floating rates.
A 50 basis point increase or decrease is used when reporting interest rate risk internally to
key management personnel and represents management’s assessment of the reasonably
possible change in interest rates.
If interest rates had been 50 basis points higher or lower and all other variables were held
constant, the group’s and company’s profit for the year ended December 31, 2014 would
decrease/increase by RMB1,045,035 (2013 : RMBNil). This is mainly attributable to the group’s
exposure to interest rates on its variable rate borrowings.
The group’s sensitivity to interest rates has increased during the current period mainly due to
a variable rate bank loan raised.
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)
Liquidity and interest risk analyses
Non-derivative financial liabilities
The following tables detail the remaining contractual maturity for non-derivative financial
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the group and company can be required
to pay. The table includes both interest and principal cash flows. The adjustment column
represents the possible future cash flows attributable to the instrument included in the
maturity analysis which is not included in the carrying amount of the financial liabilities on
the statement of financial position.
WeightedOn
average
demand
effective
or within
interest rate
1 year %
Group
2014
Non-interest bearing
-
Finance lease liability
(fixed rate)
3.62
Fixed interest rate instrument
3.16
Variable interest rate
instrument
2.45
2013
Non-interest bearing
-
Finance lease liability
(fixed rate)
2.98
Fixed interest rate
instrument
3.10
Within
2 to
5 years Adjustment
Total
RMB’000RMB’000RMB’000 RMB’000
132,077
-
- 132,077
1,001
866
(94)
1,773
148,601
20,048
(4,098)
164,551
224,044
(15,037)
244,958(19,229)
209,007
507,408
281,679
83,251 1,049
68,870
153,170
888
-
83,251
(81)
1,856
330,603
(22,931)
331,491(23,012)
376,542
461,649
(iii)
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the group. The group’s revenue is generated from the group’s largest customers as disclosed in
Note 32. The group has established credit limits for customers and monitors their balances.
The group’s credit risk is primarily attributable to its trade receivables and other receivables
as disclosed in Notes 8 and 9 respectively. Cash is held with creditworthy financial institutions.
The carrying amount of financial assets recorded in the financial statements, represents the
group’s maximum exposure to credit risk.
(iv)
Liquidity risk management
The group maintains sufficient cash and cash equivalents, and internally generated cash
flows to finance their activities. The group finances its liquidity needs through internally
generated cash flows and external financing, and minimises liquidity risk by keeping
committed credit lines available.
The company is also dependent on the immediate holding company for financial support
and management is satisfied that financial support will continue to be available as and
when required from its immediate holding company.
78
AVIC International Maritime Holdings Limited
Annual Report 2014
79
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
4
4
December 31, 2014
December 31, 2014
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)
Weighted
On
average
demand
Within
effective
or within
2 to
interest rate 1 year 5 years Adjustment
%
RMB’000
RMB’000
RMB’000
Company
2014
Non-interest bearing
-
23,174
- Fixed interest rate
instrument
3.25
139,312
- (3,282)
Variable interest rate
instrument
2.45
- 224,044
(15,037)
162,486
224,044
(18,319)
2013
Non-interest bearing
-
Fixed interest rate
instrument
3.10
18,221
-
68,870
87,091
310,277
310,277
-
(v)
Fair value of financial assets and financial liabilities
Total
RMB’000
23,174
136,030
(21,125)
(21,125)
18,221
Company
2014
Non-interest bearing
2013
Non-interest bearing
80
-
-
AVIC International Maritime Holdings Limited
Within
2 to
5 years Adjustment
RMB’000
RMB’000
-
-
10,325
558,027
10,975
10,975
14,190
The fair values of other classes of financial assets and liabilities are disclosed in the respective
notes to the financial statements.
(d)
Capital risk management policies and objectives
The group manages its capital to ensure that entities in the group will be able to continue as a
going concern while maximising the return to stakeholders through the optimisation of the debt
and equity balance, and to ensure that all externally imposed capital requirements are complied
with.
The capital structure of the group consists of debt, which includes the borrowings disclosed in Note
18, cash and bank balances disclosed in Note 7, and equity attributable to equity holders of the
company, comprising issued capital, reserves and retained earnings. Certain subsidiaries of the
company are required to set aside a minimum amount of 10% of profits annually. Such profits are
accumulated in a separate reserve called “Statutory Reserve” (Note 24). The statutory reserves
may only be distributed to shareholders upon liquidation of the subsidiary.
The group’s overall strategy remains unchanged from 2013.
5
HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS
The company is a subsidiary of AVIC International Kairong Limited (“AVIC Kairong”), incorporated in
Hong Kong. The ultimate holding company is Aviation Industry Corporation of China, incorporated in the
People’s Republic of China (“PRC”). The intermediate holding companies are AVIC International Beijing
Co., Ltd. (incorporated in PRC), CATIC Beijing Co., Ltd. (incorporated in PRC), AVIC International Holding
Corporation Co., Ltd. (incorporated in PRC), and AVIC International Holdings Limited (incorporated
Hong Kong). Related companies in these financial statements refer to members of the ultimate holding
company’s group of companies.
Some of the company’s transactions and arrangements are between members of the group and the
effect of these on the basis determined between the parties is reflected in these financial statements.
The intercompany balances are unsecured, interest-free and repayable on demand unless otherwise
stated.
Total
RMB’000
547,702
12,462
The carrying amounts of cash and bank balances, trade and other receivables and
payables approximate their respective fair values due to the relatively short-term maturity of
these financial instruments.
358,022
376,243
The following table details the expected maturity for non-derivative financial assets. The
inclusion of information on non-derivative financial assets is necessary in order to understand
the group’s liquidity risk management as the group’s liquidity risk is managed on a net
asset and liability basis. The tables below have been drawn up based on the undiscounted
contractual maturities of the financial assets including interest that will be earned on those
assets except where the group and the company anticipates that the cash flow will occur
in a different period. The adjustment column represents the possible future cash flows
attributable to the instrument included in the maturity analysis which are not included in the
carrying amount of the financial assets on the statement of financial position.
2013
Non-interest bearing
-
Fixed interest rate
instrument
3.25
209,007
368,211
Non-derivative financial assets
WeightedOn
average
demand
effective
or within
interest rate 1 year %
RMB’000
Group
2014
Non-interest bearing
-
532,660
Fixed interest rate
instrument
3.35
11,368
544,028
-
-
(368)
(368)
-
-
-
532,660
11,000
543,660
(1,300)
(1,300)
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)
547,702
20,000
567,702
12,462
14,190
Significant transactions with related companies
Group
2014
RMB’000
Shipbuilding contract income from an intermediate holding company
107,027
Shipbuilding contract cost to a related company
(80,764)
Service fee income from:
an intermediate holding company
931
related companies
18,596
Management fee income from:
an intermediate holding company
related companies
13,142
Ship-design fee income from:
immediate holding company
2,077
a related company
Other income from a related company
147
Interest expense payable to immediate holding company
(1,228)
Corporate guarantee fee payable to intermediate holding companies
(1,236)
2013
RMB’000
25,779
440
14,448
8,731
1,610
510
4,682
(1,252)
- Annual Report 2014
81
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
6
RELATED PARTY TRANSACTIONS
8
TRADE RECEIVABLES (cont’d)
Some of the company’s transactions and arrangements are with related parties and the effect of these
on the basis determined between the parties is reflected in these financial statements. The balances are
unsecured, interest-free and repayable on demand unless otherwise stated.
Compensation of directors and key management personnel
The remuneration of directors and other members of key management during the year was as follows:
The carrying values of trade receivables approximate their fair values. The average credit period is
approximately 90 days (2013 : 90 days). No interest is charged on the outstanding trade receivables.
Allowance for doubtful debts are recognised against trade receivables based on estimated irrecoverable
amounts from rendering of services, determined by reference to individual customer’s credit quality. In
determining the recoverability of trade receivables the group considers any change in the credit quality
of the trade receivable from the date credit was initially granted up to the end of the reporting period.
There is concentration risk due to trade receivables from related companies amounting to RMB10,538,000
(2013 : RMB9,126,000) and receivables from the group’s 3 largest customers amounting to RMB16,065,000
(2013 : RMB35,633,000). There are no other external customers who individually represent more than 10%
of the total balance of trade receivables.
In 2013 and 2014, trade receivables from related parties were not past due and not impaired.
The table below is an analysis of trade receivables as at December 31:
December 31, 2014
December 31, 2014
Group
2014
RMB’000
2013
RMB’000
Short-term benefits
Post-employment benefits
The remuneration of directors and executive officers of the company is determined by the remuneration
committee having regard to the performance of individuals and market trends.
7
CASH AND CASH EQUIVALENTS
4,971
309
6,095
265
Group
Company
2014
2013
2014
2013
RMB’000RMB’000RMB’000RMB’000
2014
RMB’000
Group
2013
RMB’000
Not past due and not impaired (1)
Past due but not impaired (i) (2)
Impaired receivables - individually assessed (ii)
- Past due more than 12 months
Less: Allowance for impairment
Total trade receivables, net
59,917
77,971
Aging of receivables that are past due but not impaired
< 1 month
1 month to 3 months
> 3 months 14,184
13,247
13,401
40,832
6,442
18,886
3,267
28,595
19,08549,376
40,83228,595
59,917
77,971
313
(313)
-
- - -
(i)
Cash at bank
Fixed deposits
Pledged cash placed with bank
Less:
Pledged cash placed with bank
Cash and cash equivalents in the
statement of cash flows
8
197,763
11,000
92,475
301,238
383,234
20,000
49,540
452,774
10,373
10,373
6,683
- 6,683
(92,475)
(49,540)
-
- 208,763
403,234
10,373
Cash amounting to RMB92,475,000 (2013 : RMB49,540,000) is pledged by the group as collateral for letters
of credit.
TRADE RECEIVABLES
Amount due from construction contract customers
AVIC International Maritime Holdings Limited
Movement in allowance for doubtful debts
Balance at beginning of the year
Increase in allowance recognised in profit or loss
Balance at end of the year
2014
RMB’000
82
6,683
Cash and bank balances mainly comprise cash held at bank and pledged bank deposits. The carrying
amount of these assets approximates their fair values.
Trade receivables from:
third parties
related companies (Note 5)
Allowance for doubtful debts
These amounts are stated before any deduction for impairment losses.
Management considers trade receivables that are neither past due nor impaired to be of good
credit quality.
(2)
There has not been a significant change in credit quality and amounts are still considered
recoverable.
(ii)
(1)
49,692
10,538
(313)
59,917
161,000
220,917
Group
2013
RMB’000
68,845
9,126
- 77,971
Amounts due from the construction contract customers:
Contract costs incurred plus recognised profits
Less: Provision for foreseeable losses
Less: Progress billings
2014
RMB’000
313
313
2014
RMB’000
616,986
(5,457)
(450,529)
161,000
Group
2013
RMB’000
Group
- - 2013
RMB’000
261,830
(230,714)
31,116
31,116
109,087
Annual Report 2014
83
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
December 31, 2014
8
December 31, 2014
TRADE RECEIVABLES (cont’d)
12 PLANT AND EQUIPMENT
Furniture
Movement in provision for foreseeable losses
Balance at beginning of the year
Increase in provision recognised in profit or loss
Balance at end of the year
9
Group
2014
RMB’000
5,457
5,457
2013
RMB’000
- - Provision for foreseeable losses is estimated after taking into account estimated contract revenue and
estimated total contract cost. The estimated contract revenue is based on amount contracted with
customers. The estimated total contract cost is based on amount contracted with sub-contractors or
suppliers, and in respect of amounts not contracted for, management’s estimates of the amounts to
be incurred taking into consideration historical trends of the costs incurred and adjusted for any price
fluctuation during the year, where applicable.
OTHER RECEIVABLES
Amounts due from:
associates (Note 16)
an intermediate holding
company (Note 5)
related companies (Note 5)
Deposits
Prepayments
Value added tax / GST recoverable
Staff advance
Others
Total
Group
Company
2014
2013
2014
2013
RMB’000RMB’000RMB’000RMB’000
774
- 10,336
5,379
14,316
43,619
550
4,417
79,391
856
579
- 2,105
6,613
- 99
2,147
12,399
- - - - 22
313
- - 335
165
- 165
The group’s other receivables are interest-free, repayable on demand and unsecured. The group has
not made any provision as management is of the view that these receivables are recoverable and not
impaired.
10
AMOUNT DUE FROM SUBSIDIARIES
The amount due from subsidiaries denominated in the functional currency of the company are nontrade related, unsecured, non-interest bearing and repayable on demand.
11INVENTORIES
2014
RMB’000
Raw materials
481
84
AVIC International Maritime Holdings Limited
Group
OfficeMotor
and
Total
equipment Computer vehicles Renovation
fixtures RMB’000 RMB’000RMB’000RMB’000
RMB’000RMB’000
Group
Cost:
At January 1, 2013
Additions
Arising from acquisition of
a subsidiary (Note 31)
Write-off
Exchange realignments
At December 31, 2013
Additions
Write-off
Exchange realignments
At December 31, 2014
59
50
205
3,175
2,357
- 2,562
624
16
- 5,199
3,849
3,361
- (4)
3,466
1,953
(60)
(414)
4,945
3,566
(444)
162
6,664
2,027
(28)
(951)
7,712
(150)
2,207
(80)
2,127
653
(169)
(135)
3,535
877
(373)
(220)
3,819
- - (1)
15
- - - 15
7,580
(613)
(128)
15,887
4,857
(461)
(1,665)
18,618
Accumulated depreciation:
At January 1, 2013
Depreciation
Arising from acquisition of
a subsidiary (Note 31)
Write-off
Exchange realignments
At December 31, 2013
Depreciation
Write-off
Exchange realignments
At December 31, 2014
25
34
61
2,458
550
454
1,011
961
1
5
1,648
3,912
1,921
- (2)
1,978
586
(25)
(207)
2,332
779
(304)
88
3,082
2,181
(6)
(560)
4,697
- - (48)
956
225
- (44)
1,137
467
(91)
(77)
2,271
568
(373)
(119)
2,347
- - - 6
5
- - 11
3,167
(395)
(39)
8,293
3,565
(404)
(930)
10,524
Carrying amount:
At December 31, 2014
2,613
3,015
990
1,472
4
8,094
At December 31, 2013
1,488
3,582
1,251
1,264
9
7,594
The carrying amount of the group’s plant and equipment includes an amount of RMB1,744,000
(2013 : RMB1,825,000) secured in respect of assets held under finance leases.
2013
RMB’000
- Annual Report 2014
85
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
December 31, 2014
12
PLANT AND EQUIPMENT (cont’d)
Company
December 31, 2014
Computer
RMB’000
Total
RMB’000
Cost:
At January 1, 2013
Exchange realignments
At December 31, 2013
Exchange realignments
At December 31, 2014
134
(8)
126
(4)
122
134
(8)
126
(4)
122
Accumulated depreciation:
At January 1, 2013
Depreciation
Exchange realignments
At December 31, 2013
Depreciation
Exchange realignments
At December 31, 2014
33
44
(3)
74
42
(4)
112
33
44
(3)
74
42
(4)
112
Carrying amount:
At December 31, 2014
10
10
At December 31, 2013
52
52
13GOODWILL
Cost and carrying amount:
Arising from acquisition of a subsidiary and balance
at December 31, 2013 (Note 31) Exchange realignment
At December 31, 2014
Group
RMB’000
14
INTANGIBLE ASSETS
Group
Ship design
Technical
engineering
Branding
knowhow software licenses
RMB’000
RMB’000
RMB’000
Cost:
Arising from acquisition of
a subsidiary (Note 31)
55,175
40,651
8,681
Additions - - 1,653
Write-off
- - (836)
Exchange realignment - - 154
At December 31, 2013
55,175
40,651
9,652
Additions - - 18,262
Write-off
- - (434)
Exchange realignment (5,334)
(3,930)
(2,608)
At December 31, 2014
49,841
36,721
24,872
Accumulated amortisation:
Arising from acquisition
of a subsidiary (Note 31) Amortisation Write-off
Exchange realignment At December 31, 2013
Amortisation
Write-off
Exchange realignment At December 31, 2014
-
Total
RMB’000
104,507
1,653
(836)
154
105,478
18,262
(434)
(11,872)
111,434
- 2,659
- - 2,659
2,677
- (440)
4,896
6,290
1,053
(836)
148
6,655
2,942
(434)
(1,006)
8,157
6,290
3,712
(836)
148
9,314
5,619
(434)
(1,446)
13,053
Carrying amount:
At December 31, 2014
49,841
31,825
16,715
98,381
120,891
(11,688)
109,203
At December 31, 2013
55,175
37,992
2,997
96,164
Branding and technical knowhow are arising from acquisition of Deltamarin Ltd. (Note 31). The cost of
these intangibles was based on a purchase price allocation report by a professional valuer.
The group tests goodwill annually for impairment or more frequently if there are indications that goodwill
might be impaired.
The group tests branding annually for impairment or more frequently if there are indications that branding
might be impaired.
The goodwill has been allocated to Deltamarin Ltd. (“CGU”) which is under ship-design service.
The recoverable amounts of the CGU are determined from value in use calculations for operating assets
and the net carrying amounts of non-operating assets and liabilites. The key assumptions for the value in
use calculations are those regarding the discount rates, growth rates and expected changes to selling
prices and direct costs during the period. Management estimates discount rates using pre-tax rates
that reflect current market assessments of the time value of money and the risks specific to the CGU.
The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are
based on past practices and expectations of future changes in the market.
The recoverable amounts of the branding are determined from value in use calculations. The key
assumptions for the value in use calculations are those regarding the discount rates, royalty rates, growth
rates and expected changes to selling prices and direct costs during the period. Management estimates
discount rates using pre-tax rates that reflect current market assessments of the time value of money and
the risks specific to the branding. The royalty rates are based on widely adopted industry benchmark.
The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are
based on past practices and expectations of future changes in the market.
The group prepares cash flow forecasts derived from the most recent financial budgets for CGU
approved by management for the next three years based on an estimated revenue compound annual
growth rate of 9.1% (2013 : 14.4%) and terminal growth rate of 3.5% (2013 : 3.5%) for period beyond 3
years and a royalty rate of 25% of earnings before interest and tax on the branding .
The rate used to discount the forecast cash flows from the branding is 14.43% (2013 : 12.59%) per annum.
As at December 31, 2014, any reasonably possible change to the key assumptions applied is not likely to
cause the recoverable amounts to be below the carrying amounts of the branding.
The group prepares cash flow forecasts derived from the most recent financial budgets for CGU
approved by management for the next three years based on an estimated revenue compound annual
growth rate of 9.1% (2013 : 14.4%) and terminal growth rate of 3.5% (2013 : 3.5%) for period beyond 3
years.
The rate used to discount the forecast cash flows from the CGU is 12.43% (2013 : 12.59%) per annum.
As at December 31, 2014, any reasonably possible change to the key assumptions applied is not likely to
cause the recoverable amounts to be below the carrying amounts of the CGU.
86
AVIC International Maritime Holdings Limited
Annual Report 2014
87
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
December 31, 2014
15
December 31, 2014
INVESTMENT IN SUBSIDIARIES
2014
RMB’000
Unquoted shares, at cost
Details of the company’s subsidiaries at December 31, 2014 are as follows:
393,143
Country of
incorporation Name of subsidiaries
and operation
Proportion
of ownership
interest 2014
2013
% %
Kaixin Industrial
Singapore
100
100
Pte. Ltd. (1)
Company
2013
RMB’000
407,854
100
100
Principal activities
Ship-trading agency and
shipbuilding related
businesses
Investment holding
AVIC International Singapore
100
100
Design and marine
Ship Engineering
engineering, project
management and Pte. Ltd. (1)
consutancy
Subsidiary of Kaixin Industrial Pte. Ltd.
AVIC Kaixin
PRC
100
100
(Beijing) Ship
Industry Co., Ltd. (3)
Subsidiary of AVIC International Ship Development Pte. Ltd.
Ship-trading agency
and import and
export business
AVIC International
Singapore
100
100
Offshore Pte. Ltd. (1)
Ship-trading agency
and shipbuilding
related businesses
AVIC International
PRC
100
100
Ship Development
(China) Co., Ltd. (3)
Ship-trading related
business
AVIC International
PRC
100
100
Ship Development
(Guangzhou) Co., Ltd. (4)
Ship-trading, import
and export business
Subsidiary of AVIC International Offshore Pte. Ltd.
Wholesale, import and
export, commission
agency of ship/ marine
engineering equipment/
marine equipment and
material and accessories
AVIC Tidestar Fast
Singapore
65
-
Ship-trading agency and
ship building related
Offshore Pte. Ltd. (7) (8)
businesses
AVIC International Maritime Holdings Limited
AVIC International
Luxembourg
79.57
79.57
Marine Engineering
(Lux), S.à.r.l. (2)
Design and marine
engineering, project
management and
consultancy
Subsidiary of AVIC International Marine Engineering (Lux), S.à.r.l.
Deltamarin Ltd. (5)
Finland
79.57
79.57
Design and marine
engineering, project
management and
consultancy
Subsidiary of AVIC International Marine Engineering Pte. Ltd.
Principal activities
Subsidiary of AVIC International Ship Engineering Pte. Ltd.
AVIC International
Singapore
79.57
79.57
Marine Engineering
Pte. Ltd. (1)
AVIC Ship Investment Limited (7)
88
Proportion
of ownership
interest 2014
2013
% %
AVIC International
PRC
100
100
Offshore (Xiamen)
Co., Ltd. (4)
INVESTMENT IN SUBSIDIARIES (cont’d)
Country of
incorporation Name of subsidiaries
and operation
AVIC International
Singapore
100
100
Trading, ship-trading
Ship Development
agency and
Pte. Ltd. (1)shipbuilding
related businesses
Hong Kong
15
Provision of design,
engineering and
contracting services for
offshore, shipping,
shipbuilding naval and
marine industries
Subsidiary of Deltamarin Ltd.
Deltamarin-Eesti.Oü (7)
Estonia
79.5779.57 Under liquidation
Deltamarin Brasil
Brazil
79.57
79.57
Consultoria e
Projetos Ltda (7)
Consulting and
construction engineering
services for shipping,
offshore, oil, gas and
other mineral resources,
information technology
and software design
Deltamarin Floating
Finland
79.57
79.57
Construction Ltd.
(formerly known as
Kiinteistö Oy Pilottitie) (6)
Building, construction
and financing of office
premises, buying, selling,
managing and renting of
office premises and real
estate
Deltamarin (China)
PRC
79.57
79.57
Co., Ltd. (7)
Consulting services for
ocean engineering/supply
chain/ environmental/
energy/ lifecycle
management, investment
information consulting
and technical services
Deltamarin
Poland
79.57
79.57
Sp.z o.o. (6)
Design and marine
engineering, project
management and
consultancy
DeltaLangh Ltd. (6) (8)
Finland
44.21
-
Marketing, sales and
production of exhaust gas
clearing and water
treatment systems
Annual Report 2014
89
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
15
15
December 31, 2014
INVESTMENT IN SUBSIDIARIES (cont’d)
Country of
incorporation Name of subsidiaries
and operation
December 31, 2014
Proportion
of ownership
interest 2014
2013
% %
Summarised financial information in respect of the group’s subsidiaries that has material non-controlling
interests is set out below. The summarised financial information below represents amounts before intragroup
eliminations.
Principal activities
Joint venture between Deltamarin Ltd. and Kaixin Industrial Pte. Ltd.
Deltamarin Floating
Singapore
89.79
-
Providing engineering,
Construction Pte. Ltd. (1) (8)
procurement and
(formerly known as construction services
Delta-AVIC Pte. Ltd.)
(1)
Audited by Deloitte & Touche LLP, Singapore.
(2)
Reviewed by Deloitte & Touche LLP, Singapore for consolidation purpose.
(3)
Audited by Deloitte Touche Tohmatsu, Shanghai for consolidation purpose.
(4)
Reviewed by Deloitte Touche Tohmatsu, Shanghai for consolidation purpose.
(5)
Audited by Deloitte & Touche Oy, Finland.
(6)
Audited by Deloitte & Touche Oy, Finland for consolidation purpose.
(7)
Not audited nor reviewed as the entity is immaterial to the group.
(8)
Incorporated in 2014.
Information about the composition of the group at the end of the financial year is as follows:
Principal activity
Number of whollyowned subsidiaries
Place of incorporation and operation
Investment holding
2014
2013
Hong Kong
1
1
Design and marine engineering,
project management and
consultancy
Singapore
1
1
Ship-trading agency and
shipbuilding related businesses
Singapore
3
3
PRC
4
4
9
9
Ship-trading, import and export
business
The table below shows details of non-wholly owned subsidiaries of the group that have material noncontrolling interests:
Name of
Subsidiary
Place of
incorporation
and principal
place of
business
Proportion of
ownership interests
and voting rights
held by noncontrolling interests
2014
AVIC International
Marine Engineering
Pte. Ltd. (i)
Deltamarin Floating
Construction Pte. Ltd.
(formerly known as
Delta-AVIC Pte. Ltd.)
90
Profit (loss)
allocated to
non-controlling
interests
Accumulated
non-controlling
interests
2014
2013
2014
2013
RMB’000
RMB’000
RMB’000
RMB’000
54,508
Singapore/
Finland
20.43%
20.43%
3,944
3,833
51,272
Singapore
10.22%
-
(1,189)
-
(1,087)
2,755
3,833
50,185
AVIC International Marine
Engineering Pte. Ltd.
2014
2013
RMB’000
RMB’000
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity attributable to
owners of the company
Non-controlling interests
Revenue
Expenses
Profit for the year
Profit (Loss) attributable to:
owners of the company
non-controlling interests
Profit (Loss) for the year
Other comprehensive (expense) income
attributable to:
owners of the company
non-controlling interests
(Loss) Profit for the year
Total comprehensive (expense) income
attributable to:
owners of the company
non-controlling interests
Total comprehensive (expense) income
for the year
Deltamarin Floating
Construction Pte. Ltd.
(formerly known as
Delta-AVIC Pte. Ltd.)
2014
2013
RMB’000
RMB’000
171,661
214,229
(85,335)
(30,373)
151,266
224,239
(62,564)
(26,965)
60,423
- (71,070)
- - - - - 218,910
51,272
231,468
54,508
(9,560)
(1,087)
- - 242,846
(223,541)
19,305
288,347
(269,584)
18,763
78,159
(89,800)
(11,641)
- - - 15,361
3,944
19,305
14,930
3,833
18,763
(10,452)
(1,189)
(11,641)
- - - (24,488)
(6,288)
(30,776)
(67)
(17)
(84)
893
102
995
- - - (9,127)
(2,344)
14,863
3,816
(9,559)
(1,087)
- - (11,471)
18,679
(10,646)
- Dividends paid to non-controlling interests
(892)
-
Net cash inflow (outflow)
8,916
(154,398)
-
359
- - -
Total
(i)
2013
INVESTMENT IN SUBSIDIARIES (cont’d)
54,508
This includes AVIC International Marine Engineering Pte. Ltd. and its wholly-owned subsidiaries.
AVIC International Maritime Holdings Limited
Annual Report 2014
91
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
December 31, 2014
16
December 31, 2014
INVESTMENT IN ASSOCIATES
Cost of investment in associates Share of post-acquisition loss, net of dividend received
2014
RMB’000
Group
2,725
(2,320)
405
17
2013
RMB’000
3,233
(2,173)
1,060
Details of the group’s associates at December 31, 2014 are as follows:
Place of
Proportion
Proportion
incorporation
of ownership
of voting
Principal
Name of associate
and operation interest power held activity
2014
%
GPS Deltamarin (M)
Sdn. Bhd. *
Malaysia
V. Delta Limited *(1)
Monaco
Shandong Deltamarin
Marine Engineering
Co., Ltd. *
Brodoplan d.o.o. *
*
(1)
49
-
2013
%
2014
2013
49
38.99
38.99
50
-
39.79Shipping
PRC
50
50
39.79
39.79
Shipping
Croatia
50
50
39.79
39.79
Shipping
Deferred tax liabilities
Deferred tax assets
Group
2013
RMB’000
22,039
(497)
21,542
26,127
(557)
25,570
The following are the major deferred tax liabilities and (assets) recognised by the group and the
movements during the year:
Group
Fair value
adjustment
on business
Accrued
combination
revenue
Others
Total
RMB’000RMB’000RMB’000
RMB’000
Arising from acquisition
of a subsidiary (Note 31)
23,573
2,314
(244)
25,643
(Credit) Charge to profit or
loss (Note 28)
(720)
960
(313)
(73)
At December 31, 2013
22,853
3,274
(557)
25,570
(Credit) Charge to profit or
loss (Note 28)
(551)
3,044
(2)
2,491
Effect of change in tax rate
(4,146)
- - (4,146)
Foreign exchange realignment
(1,808)
(627)
62
(2,373)
At December 31, 2014
16,348
5,691
(497)
21,542
18LOANS
The aggregate information of associates that are not individually material is set out below:
Group’s share of associates’ net assets
405
2013
RMB’000
6,934
(5,060)
1,874
1,060
Revenue
11,432
14,330
Loss for the year
(1,045)
(4,374)
Group’s share of associates’ loss for the year
(378)
(2,173)
92
2014
RMB’000
Audited by Deloitte & Touche Oy, Finland for consolidation purpose.
Fully disposed in 2014.
2014
RMB’000
Total assets
18,785
Total liabilities
(17,770)
Net assets
1,015
Shipping
DEFERRED TAX
AVIC International Maritime Holdings Limited
Group
Company
2014
2013
2014
2013
RMB’000RMB’000RMB’000
RMB’000
Short-term
- Loan A (i) 9,289
- Shareholder’s loan
- Loan B (ii) - Loan C (iii) - Loan D (iv) Long-term loan
- Loan E (v) (Note 5)
- Loan F (vi) - 196,897
- 196,897
209,007
- 209,007
- 209,007196,897209,007
196,897
364,269
376,542
345,037
358,022
(136,030)
(66,990)
(136,030)
(66,990)
228,239
309,552
209,007
291,032
Less: Amount due for
settlement within
12 months (shown under
current liabilities)
Amount due for settlement
after 12 months
136,030137,890136,030
137,890
- 23,235
- 23,235
19,232
18,520
- - 155,262179,645136,030
161,125
Annual Report 2014
93
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
18
18
December 31, 2014
LOANS (cont’d)
(1)
(2)
Short-term loan
(i)
On August 20, 2013, the company’s wholly owned subsidiary, Kaixin Industrial Pte. Ltd. (“Kaixin”),
entered into a facility agreement (the “Facility Agreement”) with Oversea-Chinese Banking
Corporation (the “Bank”), pursuant to which the Bank shall grant Kaixin a revolving credit
facility of SGD17,900,000 (equivalent to RMB83,138,340) at an interest rate of 1.4% per annum
over Swap Offer Rate (SGD) or London Interbank Offered Rate (“LIBOR”) (USD) whichever
applicable. On January 17, 2014, a loan of SGD2,000,000 (equivalent to RMB9,289,200) was
drawn down, and the interest rate has been fixed at 1.618% then. The loan will be rolled every
three months at the Bank’s absolute discretion.
The loan is secured by a standby letter of credit issued by Oversea-China Banking Corporation
(China) Limited, Beijing branch for an aggregate amount of not less than RMB100,000,000.
LOANS (cont’d)
(3)
Long-term loan
(v) On December 12, 2012, AVIC Kairong (Note 5), the company’s immediate holding company,
entered into a facility agreement (the “Facility Agreement”) with Industrial Commercial Bank
of China (Asia) Limited (the “Bank”), pursuant to which the Bank shall grant AVIC Kairong
a term loan of Euro26,000,000 (equivalent to RMB216,406,000) at the interest rate of 3% per
annum. On December 20, 2012, the company and AVIC Kairong entered into a deed
of assignment (the “Assignment”), pursuant to which AVIC Kairong shall assign rights and
benefits under the Facility Agreement to the company subject to the terms and conditions
contained in the Assignment. Under the Assignment, the company also agreed to pay the
Bank such amounts which may be chargeable by the Bank on the terms and conditions as
set out under the Facility Agreement.
Shareholder’s loan
(ii)
In 2012, the company was granted a shareholder’s loan amounting to US$24,000,000
(equivalent to RMB151,204,000) from the immediate holding company, AVIC Kairong, with a
loan tenure of three years (mature on August 27, 2015). On April 8, 2013, the company and
AVIC Kairong entered into a supplementary agreement, pursuant to which the company will
repay the principal loan amount at SGD29,769,600 (equivalent to RMB143,442,000) based on
exchange rate of 1.2404 against USD. With effect from April 1, 2013, the principal interest will
remain unchange at 0.85% per annum and will be payable based on principal amount of
SGD29,769,600 instead.
FRS 39 Financial Instrument : Recognition and Measurement requires certain categories of
financial assets and liabilities to be measured at fair value and are subsequently measured at
amortised cost using the effective interest method. At the date of grant, the excess of nominal
value over fair value of the shareholder’s loan amounting to RMB346,000 was computed and
recorded in capital reserve. The shareholder’s loan that was carried at amortised cost of
RMB23,235,000 as at December 31, 2013 based on a market prime rate of 3% per annum
has been fully repaid in December 2014 with corresponding interest expenses adjustment
of RMB324,000 (2013 : RMB20,000) having been taken to profit or loss as deemed interest
expense charged by the immediate holding company.
(iv)On March 20, 2013, the company’s wholly-owned subsidiary, AVIC International Ship
Development Pte. Ltd., was granted a shareholder’s loan amounting to US$3,250,000
(equivalent to RMB19,865,000) from the immediate holding company, AVIC Kairong, with a
loan tenure of three years. The loan is interest-free, unsecured and repayment terms will be
negotiated six months before the end of the loan tenure.
FRS 39 Financial Instrument : Recognition and Measurement requires certain categories of
financial assets and liabilities to be measured at fair value and are subsequently measured
at amortised cost using the effective interest method. At the date of grant, the excess of
nominal value over fair value of the shareholder’s loan amounting to RMB1,867,000 was
computed and recorded in capital reserve. The shareholder’s loan is carried at amortised
cost of RMB19,232,000 (2013 : RMB18,520,000) as at December 31, 2014 based on a market
prime rate of 3.25% (2013 : 3.25%) per annum with corresponding interest expenses adjustment
of RMB610,000 (2013 : RMB522,000) having been taken to profit or loss as deemed interest
expense charged by the immediate holding company.
AVIC International Maritime Holdings Limited
The loan is secured by a standby letter of credit issued by Industrial and Commercial Bank
of China Limited, Beijing branch for an aggregate amount of not less than RMB230,000,000.
The loan is due for repayment with three instalments. (1) 10% to be paid 12 months after the
date of first drawdown; (2) 20% to be paid 24 months after the date of first drawdown; and (3)
70% of the principal to be paid in three years from the date of the loan drawdown. The loan
was drawn down directly from the Bank on December 20, 2012 and has been fully repaid in
December 2014 together with interests.
(vi)On November 5, 2014, the company entered into a facility agreement (the “Facility
Agreement”) with Bank of China Limited (the “Bank”), pursuant to which the Bank shall grant
the company a revolving credit facility of SGD45,000,000 (equivalent to RMB209,007,000) at
the floating interest rate of 2% per annum over Singapore Interbank Offered Rate (“SIBOR”).
The loan tenure is three years, maturing on November 5, 2017. The loan was drawn down
directly from the Bank in two tranches on December 18, 2014 and December 26, 2014.
FRS 39 Financial Instrument : Recognition and Measurement requires certain categories of
financial assets and liabilities to be measured at fair value and are subsequently measured
at amortised cost using the effective interest method. At the date of grant, the excess of
nominal value over fair value of the shareholder’s loan amounting to RMB10,257,000 was
computed and recorded in capital reserve. The shareholder’s loan is carried at amortised
cost of RMB136,030,000 (2013 : RMB137,890,000) as at December 31, 2014 based on a market
prime rate of 3.25% (2013 : 3.25%) per annum with corresponding interest expenses adjustment
of RMB4,480,000 (2013 : RMB3,749,000) having been taken to profit or loss as deemed interest
expense charged by the immediate holding company.
(iii) On December 20, 2013, the company was granted a shareholder’s loan amounting to
Euro 2,800,000 (equivalent to RMB23,561,000) from the immediate holding company, AVIC
Kairong, with a loan tenure of six months. The loan is interest-free, unsecured and repayable
on June 20, 2014.
94
December 31, 2014
19
The loan is secured by a corporate guarantee in favour of the Bank from an intermediate
holding company, AVIC International Holdings Ltd.
Management is of the view that the carrying amount of each of the above loans approximates
their fair value based on the borrowing rates currently available for bank loans with similar terms
and maturity and the interest rates approximate the market interest rates.
TRADE PAYABLES
2014
RMB’000
Trade payables to third parties
Amounts due to construction contract customers
44,162
5,743
49,905
Amounts due to construction contract customers:
2014
RMB’000
Contract costs incurred plus recognised profits
Less: Progress billings 110,197
(115,940)
(5,743)
Group
2013
RMB’000
8,837
21,406
30,243
Group
2013
RMB’000
335,974
(357,380)
(21,406)
The average credit period on purchase of goods is 90 days (2013 : 90 days). No interest is charged on the
outstanding balance.
Annual Report 2014
95
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
December 31, 2014
20
December 31, 2014
ADVANCE RECEIVED
Advance received from:
third parties
related companies (Note 5)
2014
RMB’000
22
Group
2013
RMB’000
38,744
-
38,744
36,614
2,489
39,103
FINANCE LEASES
Group
Minimum Present value of
lease payments
minimum lease payments
2014
2013
RMB’000 RMB’000
Advance received represents amount received from customers in advance in connection to shipbuilding
project management service.
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
Less: Future finance charges
Present value of lease obligations
21
OTHER PAYABLES AND ACCRUALS
Less: Amount due for settlement within
12 months (shown under current liabilities)
Amount due for settlement after 12 months
Group
Company
2014
2013
2014
2013
RMB’000
RMB’000
RMB’000
RMB’000
Accrued expenses
Other payables due to:
third parties
an intermediate holding company (Note 5)
immediate holding company (Note 5)
related companies (Note 5)
a subsidiary (Note 5)
Interest payable to bank
Other tax payable
Dividend payable (Note 33)
Others
Total other payables and accruals Current
Non-current
96
46,138
45,374
3,735
- 18,614
13,351
- 93
1,021
892
5,092
88,936
- 5,710
18,670
- - 60
2,937
- 4,600
77,351
85,20177,351
3,735
- 88,936
77,351
6,410
13,568
3,103
93
23,174
23,174
- 23,174
13,094
60
- 18,221
18,221
- 18,221
No interest is charged on the other payables. The carrying amount of other payables approximates their
fair values.
AVIC International Maritime Holdings Limited
2013
RMB’000
1,049
967
1,018
888
806
838
1,937
1,773
1,856
(81)
- - 1,8561,773 1,856
(967)
806
(1,018)
838
It is the group’s policy to lease certain of its plant and equipment under finance leases. The average
lease term is 4 years (2013 : 4 years). For the year ended December 31, 2014, the average effective
borrowing rate was 3.62% (2013 : 2.98%) per annum. Interest rates are fixed at the contract date, and
thus expose the group to fair value interest rate risk. All leases are on a fixed repayment basis and no
arrangements have been entered into for contingent rental payments.
All lease obligations are denominated in Euro.
The fair value of the group’s lease obligations approximate their carrying amounts.
The group’s obligations under finance leases are secured by the lessors’ title to the leased assets.
23
SHARE CAPITAL
5,067
1,001
866
1,867
(94)
1,773
2014
RMB’000
Group and Company
Issued and paid up:
At beginning and end of the year
2014
2013
Number of ordinary shares
285,576,000
285,576,000
2014
RMB’000
2013
RMB’000
101,237
101,237
Fully paid ordinary shares, which have no par value, carry one vote per share and a right to dividends as
and when declared by the company.
24RESERVES
Capital reserve
Capital reserve represents a deemed contribution from the immediate holding company as a result of
initially measuring the shareholder’s loan at fair value.
Statutory reserve
The subsidiaries follow the accounting principles and relevant financial regulations of the People’s
Republic of China (“PRC GAAP”) applicable to Sino-foreign equity joint venture enterprises in the
preparation of the accounting records and statutory financial statements.
Appropriation to the statutory reserve by the Sino-foreign equity joint venture enterprise is determined at
10% of the profit arrived in accordance with PRC GAAP for each year.
The profit arrived at must be set-off against any accumulated losses sustained by the subsidiaries and
associates in prior years, before allocation is made to the statutory reserve. Appropriation to the
subsidiary reserve must be made before distribution of dividends to shareholders. The appropriation
is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not
distributable in the form of cash dividends.
Annual Report 2014
97
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
24
RESERVES (cont’d)
28
INCOME TAX EXPENSE (cont’d)
Translation reserve
The translation reserve account comprises all foreign exchange differences arising from the translation of
the financial statements of foreign operations and translation of the financial statements for presenting
in RMB.
Singapore income tax is calculated at 17% of the estimated assessable profit for the year. Taxation for
other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions as explained below.
Pursuant to the new PRC Enterprise Income Tax Law promulgated on March 16, 2007, the enterprise
income tax for both domestic and foreign-invested enterprises are unified at 25% effective from January
1, 2008.
The corporate income tax rate in Finland was 24.5% in 2013 and has been reduced to 20.0% with effective
from January 1, 2014.
The income tax expense varied from the amount of income tax expense determined by applying the
above income tax rates to profit before tax as a result of the following differences:
December 31, 2014
December 31, 2014
25REVENUE
2014
RMB’000
Shipbuilding revenue Service fee income Management service fee Ship-design fee income EPC revenue
Other income
Total revenue
26
2014
RMB’000
Net foreign exchange gain
Government grants
Net fair value gain on financial instrument
Other income
Interest income
Total
27
2014
RMB’000
Interest on shareholder’s loan (1) (Note 18)
Interest on term loan (Note 18)
Bank charges
Withholding tax on term loan interest
Corporate guarantee fee
Others Total
(1)
28
Group
2013
RMB’000
562
73
1,278
2,351
4,264
Group
5,414
6,147
2,056
1,025
1,236
73
15,951
Profit before income tax
24,214
Income tax expense calculated at 17%
Utilisation of deferred tax benefits previously not recognised
Non-deductible items
Deferred tax benefits not recognised
Effect of income that is exempt from taxation
Effect of tax rebate and exemption
Effect of different tax rates of subsidiaries operating
in other jurisdictions
Effect on deferred tax balances due to the
change in income tax rate from 24.5% to 20.0%
Overprovision of prior year’s income tax
Others
Total
4,116
5,731
2,651
(3,895)
-
Group
2013
RMB’000
21,211
3,606
(1)
7,446
205
(335)
(127)
2,559
4,409
(4,146)
(170)
172
7,018
55
15,258
In 2014, the group has undistributed profits of subsidiaries of RMB78,728,000 (2013 : RMB49,262,000).
Dividends declared in respects of the undistributed profits will be subject to withholding tax of 5% for
PRC subsidiaries and 15% for Finnish subsidiary. The potential deferred tax liability of approximately
RMB11,816,000 (2013 : RMB8,095,000) has not been recognised as management is able to control the
timing of the reversal of the temporary difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
2013
RMB’000
5,072
6,499
522
1,188
23
13,304
2014
RMB’000
At the end of the reporting period, the group has unutilised tax losses of RMB16,800,000 (2013 : RMB1,206,000).
No deferred tax asset has been recognised in respect of such losses due to the unpredictability of future
profit streams.
This includes both interest payable and deemed interest expenses.
INCOME TAX EXPENSE
2014
RMB’000
Current tax expense
Overprovision of prior year’s income tax
Deferred tax expense (benefit)
Effect of changes in tax rates
98
235,233
32,120
26,010
288,347
19,596
601,306
17,306
4,000
- 712
3,086
25,104
FINANCE COSTS
2013
RMB’000
90,853
24,990
17,876
242,846
78,159
334
455,058
OTHER OPERATING INCOME
Group
AVIC International Maritime Holdings Limited
8,843
(170)
2,491
(4,146)
7,018
Group
2013
RMB’000
15,331
(73)
- 15,258
Annual Report 2014
99
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
29
31
December 31, 2014
December 31, 2014
PROFIT FOR THE YEAR
Profit for the year has been arrived at after charging (crediting):
Group
2014
2013
RMB’000
RMB’000
Directors’ remuneration (including directors’ fee):
of the company
3,343
3,344
of the subsidiaries
1,392
2,236
Employees benefit expense (including directors’ remuneration)
80,909
71,026
Cost of defined contribution plans (included in employee benefits expense)6,826
6,155
Audit fees:
paid to auditors of the company
1,300
1,639
paid to other auditors
640
1,194
Other assurance service fees:
paid to auditors of the company
223
248
paid to other auditors
175
297
Non-audit fees:
paid to auditors of the company
107
136
paid to other auditors
524
733
Depreciation of plant and equipment 3,565
3,912
Plant and equipment written off
57
218
Amortisation of intangible assets (included in administrative expenses)
5,619
3,712
Gain on disposal of available-for-sale investments
- (189)
Bad debt written off
- 1,043
Allowance for doubtful debts
313
Provision for foreseeable losses
5,457
Loss on disposal of an associate
213
Net foreign exchange (gain) loss (included in other operating income
[2013: administrative expense])
(17,306)
24,632
30
EARNINGS PER SHARE
The calculation of basic and diluted earnings per share is based on the profit attributable to owners of
the company of RMB14,441,000 (2013 : RMB2,120,000) and weighted average number of 285,576,000
(2013 : 285,576,000) ordinary shares.
ACQUISITION OF A SUBSIDIARY (cont’d)
Goodwill arising on acquisition
2013
RMB’000
Consideration transferred
214,866
Plus: Non-controlling interest (1)50,692
Less: Fair value of identifiable net assets acquired
(144,667)
Goodwill arising on acquisition 120,891
(1)
The non-controlling interest recognised at fair value.
Goodwill arose in the acquisition of Deltamarin because the cost of the combination included a control
premium. In addition, the consideration paid for the combination effectively included amounts in relation
to the benefit of expected synergies, revenue growth, future market development and the assembled
workforce of Deltamarin. These benefits are not recognised separately from goodwill because they do
not meet the recognition criteria for identifiable intangible assets.
The group also acquired the customer lists and customer relationships of Deltamarin as part of the
acquisition. These assets could not be separately recognised from goodwill because they are not
capable of being separated from the group and sold, transferred, licensed, rented or exchanged, either
individually or together with any related contracts. Consequently, they are subsumed into goodwill.
None of the goodwill arising on this acquisition is expected to be deductible for tax purposes.
Net cash inflow on acquisition of subsidiary
2013
RMB’000
Consideration paid in cash
Less: Cash and cash equivalents balances acquired
Less: Decrease in cash held in trust
(214,866)
44,346
214,866
44,346
On January 4, 2013 (the acquisition date), the amount of cash held in trust of Euro25,980,000 (equivalent
to RMB214,866,000) was paid out for the completion of the acquisition of Deltamarin.
31
ACQUISITION OF A SUBSIDIARY
Impact of acquisitions on the results of the group
On January 4, 2013, the group acquired 79.57% of the issued share capital of Deltamarin Ltd. (“Deltamarin”)
for an aggregate consideration of Euro 25,980,000 (equivalent to RMB214,866,000). This transaction has
been accounted for by the acquisition method of accounting.
Included in the profit for 2013 was RMB27.0 million attributable to the additional business generated
by Deltamarin. Revenue for the period from Deltamarin amounted RMB288.3 million. Had the business
combination during the year been effected at January 1, 2013, the impact on group’s revenue and
profit for the year from continuing operations would be insignificant as the acquisition took place on
January 4, 2013.
Deltamarin is a limited liability company incorporated in Finland with its principal activity of provision
of design, engineering and contracting services for offshore, shipping, shipbuilding naval and marine
industries. The acquisition of Deltamarin will enable the group to acquire ship-design capabilities, and is
part of the group’s acquisition growth strategy to be a dominant player in the shipping industry.
The fair value of assets acquired and liabilities assumed at the date of acquisition were as follows:
Deltamarin Ltd.
Tangible assets and liabilities
Cash and cash equivalents
Plant and machineries
Investment in associates
Intangible assets (software license)
Available-for-sale investments
Derivative financial instruments Deferred tax liabilities
Other assets and liabilities
Intangible assets identified
Brand name
Technical knowhow
Net assets acquired and liabilities assumed 100
AVIC International Maritime Holdings Limited
2013
RMB’000
44,346
4,413
3,232
2,391
327
84
(25,643)
19,691
48,841
55,175
40,651
144,667
32
SEGMENT INFORMATION
For the purpose of the resource allocation and assessment of segment performance, the group’s
chief operating decision makers have focused on the business operating units which in turn, are
segregated based on their services. This forms the basis of identifying the segments of the group under
FRS 108 - Operating Segments.
Operating segments are aggregated into a single operating segment if they have similar economic
characteristics.
The group’s reportable operating segments under FRS 108 are as follows:
(a)
Shipbuilding project management service – provision of shipbuilding project management and
consultancy services.
(b)
Shipbuilding construction service – provision of shipbuilding construction services.
(c)
Marketing and consulting service – services rendered in respect to marketing and consulting
activities.
(d)
Ship-design service – provision of ship-design services.
Annual Report 2014
101
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
32
SEGMENT INFORMATION (cont’d)
32
SEGMENT INFORMATION (cont’d)
(e)
EPC service – provision of engineering, procurement and construction services.
(f)
Others – sale of steel used in shipbuilding.
The accounting policies of the reportable segments are the same as the group’s accounting policies
described in Note 2. Segment profit represents the profit earned by each segment without allocation
of finance income, finance costs, and income tax expense. This is the measure reported to the
chief operating decision maker for the purposes of resource allocation and assessment of segment
performance.
Segment revenue represents revenue generated from external and internal customers. Segment profits
represent the profit earned by each segment after allocating central administrative costs. This is the
measure reported to the chief operating decision maker for the purpose of resource allocation and the
assessment of segment performance.
Segment assets and liabilities and other segment information
December 31, 2014
December 31, 2014
For the purposes of monitoring segment performance and allocating resources between segments, the
chief operating decision maker monitors the tangible and financial assets attributable to each segment.
Goodwill has been allocated to reportable segments as described in Note 13 to the financial statements.
Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual
reportable segment.
Segment revenues and results
Information regarding the group’s reportable segments is presented as below:
ShipbuildingMarketing
project Shipbuilding
and
management construction consulting Ship-design service
service
service
service
RMB’000
Group
2014
REVENUE
Third parties
5,463
Related companies 19,527
24,990
LIABILITIES
Segment liabilities
25,994
4,706
22,882
77,565
68,545
- 199,692
Unallocated liabilities
376,640
Total liabilities
576,332
EPC
service
Others
Total
RMB’000
RMB’000
188
147
335
313,138
141,920
455,058
RMB’000
RMB’000
RMB’000 RMB’000
(16,174)
107,027
90,853
4,733
13,142
17,875
240,769
2,077
242,846
78,159
78,159
39,775
22,479
(15,647)
24,214
(7,018)
17,196
2013
REVENUE
Third parties
Related companies
545,106
56,200
601,306
235,232
235,232
2,831
23,179
26,010
286,228
2,120
288,348
-
14,914
4,682
19,596
RESULT
Segment result
4,038
11,382
3,195
35,576
- 1,026
Unallocated other
operating income
Unallocated
corporate expenses
Unallocated
finance costs
Profit before income tax
Income tax expense
Profit for the year
102
AVIC International Maritime Holdings Limited
2013
ASSETS
Segment assets
527
- 11,662
282,170
- 17,467 311,826
Unallocated assets
488,755
Total assets
800,581
LIABILITIES
Segment liabilities
4,120
16,824
36,139
60,461
- - 117,544
Unallocated liabilities
440,514
Total liabilities
558,058
RESULT
Segment result
10,249
3,992
7,331
29,508
(11,640)
335
Unallocated other
operating income
Unallocated
corporate expenses
Unallocated
finance costs
Profit before income tax
Income tax expense
Profit for the year
5,901 26,219
32,120
ShipbuildingMarketing
project Shipbuilding
and
management construction consulting Ship-design EPC
service
service
service
service
service
Others
Total
RMB’000
RMB’000
RMB’000
RMB’000 RMB’000
RMB’000 RMB’000
Group
2014
ASSETS
Segment assets
227
59,168
15,752
181,222
56,796
4,521 317,686
Unallocated assets
500,970
Total assets
818,656
(22,393)
55,217
2,802
(23,698)
(13,110)
21,211
(15,258)
5,953
Other segment information
Group
2014
Depreciation and
amortisation
491
-
351
8,342
-
-
9,184
Additions to non
current assets
704
- 503
21,912
- - 23,119
Unallocated
additions to
non-current assets
-
23,119
2013
Depreciation and
amortisation
793
- 641
6,190
- - 7,624
Additions to non
current assets
- - - 228,769
- - 228,769
Unallocated
additions to
non-current assets
9,711
238,480
Annual Report 2014
103
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
32
SEGMENT INFORMATION (cont’d)
34
Geographical information
December 31, 2014
December 31, 2014
The group’s revenue from customers and information about its segment assets by geographical location
are detailed below:
Group
Revenue
Non-current assets
2014
2013
2014
2013
RMB’000 RMB’000 RMB’000
RMB’000
China
Iraq
Finland
Norway
Malaysia
Singapore
Others
257,792228,104
1,042
(16,174)
235,232
- 126,704
32,897
213,688
947
19,264
- 22,152
16,949
- 9,155
5,824
1,353
54,482
63,036
- 455,058 601,306
216,083
75
223,632
2,002
- 225,709
Information about major customers
The group’s revenue generated from the group’s largest customers by each segment are detailed
below:
Shipbuilding
Marketing
project
Shipbuilding
and
management
construction
consulting
Ship-design EPC
service
Others
service
service
service
service
OPERATING LEASE ARRANGEMENTS
Minimum lease payments under operating lease
recognised as an expense in the year
6,424
8,962
-
-
-
-
-
15,386
-
-
107,027 -
-
-
-
107,027
5,520
7,080
-
-
-
-
-
12,600
-
-
-
37,286 22,152
15,457
- 74,895
58,479
58,479
2013
Customer 1
Customer 2
Customer 3
Customer 4
Customer 5
Total
26,214
-
-
-
-
26,214
-
-
-
-
235,232
235,232
14,448
-
-
-
-
14,448
-
26,322 17,226 16,563 -
60,111
-
-
147
- 147
- - 104
On December 18, 2014, a subsidiary of the company, AVIC International Maritime Engineering Pte. Ltd.
(“AIME”), declared a total dividend of Euro590,000 (equivalent to RMB4,431,000) to its shareholders.
The group holds 79.57% equity interest of AIME, with the remaining 20.43% equity interest held by noncontrolling shareholders. As a result, a total dividend of Euro121,000 (equivalent to RMB892,000) shall
be paid to the non-controlling shareholders. The dividend was payable on December 18, 2014 and
remained unpaid as at December 31, 2014.
AVIC International Maritime Holdings Limited
2013
RMB’000
16,906
15,166
At the end of the financial year, the group has outstanding commitments under non-cancellable
operating leases, which fall due as follows:
Group
2014
2013
RMB’000
RMB’000
Within one year
In the second to fifth years inclusive
After five years
35
14,761
47,085
13,014
74,860
16,256
44,737
19,685
80,678
EVENTS AFTER THE REPORTING PERIOD
a) Change in interest of shareholders
On March 5, 2015, AVIC International Kairong Limited (“AVIC Kairong”) which owned 73.87% of
the company’s shareholding transferred its entire shareholding in the company of 210,947,369
shares to AVIC International Holdings Limited. Subsequent to the restructuring, AVIC International
Holdings Limited became the company’s immediate holding company.
b) Capital injection
On March 9, 2015, AVIC Tidestar Fast Offshore Pte. Ltd. (“ATFO”), which 65% shareholding is owned
by AVIC International Offshore Pte. Ltd. (“AIO”), increased its issued and fully paid up share capital
from USD100 (equivalent to RMB615) to USD400,000 (equivalent to RMB2,458,000) by way of the
issuance of 399,900 new shares of USD1 each for a total consideration of USD399,900 (equivalent
to RMB2,457,385). AIO’s shareholding percentage in ATFO remain unchanged after the capital
injection.
Subsequent to the year end, ATFO has drawdown an aggregate loan amount of USD1,010,000
(equivalent to RMB6,207,000) from its shareholders, which are granted on a pro-rata basis in
accordance with the shareholders’ respective shareholding interests in ATFO. The loans are
unsecured, repayable on demand and bear interest at 5% per annum.
c)
Intra-group restructuring
Subsequent to the year end, the group underwent a series of internal corporate restructuring (the
“Internal Restructuring”) to streamline its operations based in PRC. Upon completion of the Internal
Restructuring on March 30, 2015, the share capital of AVIC International Ship Development (China)
Co., Ltd. (“AISD (China)”) increased from RMB100 million to RMB290 million and the shareholding
interests of some of the group’s wholly-owned PRC-incorporated subsidiaries were re-organised
as follows:
(a)
AVIC International Offshore Pte. Ltd. contributed an aggregate of RMB24.389 million by
transfer its entire equity interest in AVIC International Offshore (Xiamen) Co., Ltd. to AISD
(China), in return for an equity interest of 8.41% of AISD (China);
(b)
Kaixin Industrial Pte. Ltd. contributed an aggregate of RMB145.638 million by transfer its
entire equity interest in AVIC Kaixin (Beijing) Ship Industry Co., Ltd. to AISD (China), in return
for an equity interest of 50.22% in AISD (China); and
(c) AVIC Interantional Ship Development Pte. Ltd. (“AISD (Singapore)”) further contributed an
aggregate of RMB19.973 million by transfer its entire equity interest in AVIC International
Ship Development (Guangzhou) Co., Ltd. (“AISD (Guangzhou)”), to AISD (China). Based
on its initial capital contribution of the equivalent of RMB100 million prior to this Internal
Restructuring, and a valuation of AISD (Guangzhou) stake at RMB19.973 million, AISD
(Singapore) became a 41.37% equity holder of AISD (China).
33DIVIDENDS
Group
RMB’000RMB’000RMB’000RMB’000 RMB’000
RMB’000
2014
Customer 1
Customer 2
Customer 3
Customer 4
Customer 5
Customer 6
Customer 7
Total
2014
RMB’000
Annual Report 2014
105
Statistics Of Shareholdings
Notice of the Annual General Meeting
As at 27 March 2015
(formerly known as AVIC International Investments Limited)
(Incorporated in Singapore on 11 November 2010)
(Registration No. 201024137N)
Class of shares
: Ordinary Shares
No. of Shares (excluding treasury shares) : 285,576,000
Voting Rights
: One vote per share
NOTICE IS HEREBY GIVEN that the Annual General Meeting of AVIC International Maritime Holdings
Limited (the “Company”) will be held at 3pm on 29 April 2015 at Millenia 4, 2nd Floor, The Ritz-Carlton,
Millenia Singapore, 7 Raffles Avenue 039799 for the following purposes:
As at 27 March 2015, the Company did not hold any treasury shares.
As Ordinary Business
Distribution Of Shareholdings
No. of
No. Of
Size Of Shareholdings
Shareholders
%
Shares
%
1 - 99
1,834
43.69
77,658
0.03
100 - 1,000
1,994
47.50
644,805
0.23
1,001 - 10,000
288
6.86
697,312
0.24
10,001 - 1,000,000
76
1.81
9,692,087
3.39
1,000,001 And Above
6
0.14
274,464,138
96.11
Total
4,198100.00285,576,000100.00
Twenty Largest Shareholders
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
To receive and adopt the Audited Financial Statements of the Company for the financial (Resolution 1)
year ended 31 December 2014 (“FY2014”), together with the Reports of the Directors and
Auditors thereon.
2.
To approve the Directors’ Fees of S$280,000 for FY2014.
3.
To re-elect Dr Diao Weicheng, a Director who retires pursuant to Article 91 of the Company’s (Resolution 3)
Articles of Association, and who, being eligible, is offering himself for re-election.
[Explanatory Note (i)]
4.
To re-elect Ms Alice Lai Kuen Kan, a Director who retires pursuant to Article 91 of the (Resolution 4)
Company’s Articles of Association, and who, being eligible, is offering herself for
re-election.
[Explanatory Note (ii)]
5.
To re-elect Mr Chong Teck Sin, a Director who retires pursuant to Article 91 of the Company’s (Resolution 5)
Articles of Association, and who, being eligible, is offering himself for re-election.
[Explanatory Note (iii)]
6.
To re-elect Mr Li Meijin, a Director who retires pursuant to Article 91 of the Company’s (Resolution 6)
Articles of Association, and who, being eligible, is offering himself for re-election.
[Explanatory Note (iv)]
7.
To re-appoint Messrs Deloitte & Touche LLP as Auditors of the Company and to authorise (Resolution 7)
the Directors of the Company to fix their remuneration.
Name
Uob Kay Hian Private Limited
Dbs Vickers Securities (Singapore) Pte Ltd
Rhb Securities Singapore Pte Ltd
Citibank Nominees Singapore Pte Ltd
Hsbc (Singapore) Nominees Pte Ltd
Raffles Nominees (Pte) Limited
Ocbc Securities Private Limited
Lim Teck Chay
Db Nominees (Singapore) Pte Ltd
Dbs Nominees (Private) Limited
Leung Tai Keung
Yuen Suk Ching
Phillip Securities Pte Ltd
Peh Hock Choon Phua Gim Chuan
Chua Bock Eng
Cheng Bing
Chicken Delight Private Limited
Tan Eng Hong
United Overseas Bank Nominees (Private) Limited
Total
No. Of Shares
%
211,041,130
73.90
26,545,772
9.30
19,019,898
6.66
8,242,517
2.89
7,030,119
2.46
2,584,702
0.91
940,803
0.33
800,000
0.28
679,703
0.24
627,351
0.22
584,000
0.20
584,000
0.20
466,010
0.16
378,140
0.13
291,000
0.10
270,000
0.09
240,000
0.08
202,000
0.07
191,511
0.07
163,995
0.06
280,882,65198.35
Substantial Shareholders A At 27 March 2015
(As recorded in the Register of Substantial Shareholders)
NAME
NO. OF SHARES
AVIC International Holdings Limited PUBLIC FLOAT
AVIC International Maritime Holdings Limited
(Resolution 2)
As Special Business:
To consider and if deemed fit to pass the following Ordinary Resolutions with or without modifications:
8.
Share Issue Mandate
THAT pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore and Rule
806 of the Listing Manual of Singapore Exchange Securities Trading Limited (“SGX-ST”),
authority be and is hereby given to the Directors of the Company to allot and issue
whether by way of bonus or otherwise, (i) shares; (ii) convertible securities; (iii) additional
convertible securities (where an adjustment, to the number of convertible securities
to which a holder is originally entitled to, is necessary as a result of any rights, bonus
or other capitalization issues by the Company), notwithstanding that such authority
may have ceased to be in force at the time such additional convertible securities
are issued, provided that the adjustment does not give the holder of the convertible
securities a benefit that a shareholder does not receive; and/or (iv) shares arising from
the conversion of securities in (ii) and additional convertible securities in (iii) above,
notwithstanding that such authority may have ceased to be in force at the time the
shares are to be issued, and any such issue may be made at any time and upon such
terms and conditions and for such purposes and to such persons as the Directors of the
Company may in their absolute discretion deem fit,
(Resolution 8)
%
210,947,36973.87
Based on the information provided, to the best knowledge of the Directors and the substantial shareholder of the Company,
approximately 26.13% of the issued ordinary shares of the Company was held in the hands of the public as at 27 March 2015.
Accordingly, the Company has complied with Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading
Limited.
106
1.
PROVIDED THAT:
(i) the aggregate number of shares and convertible securities to be issued pursuant to
this Resolution shall not exceed 50% of the total number of the issued shares (excluding treasury shares) of the Company, of which the aggregate number of shares and
convertible securities issued other than on a pro rata basis to existing shareholders of
the Company shall not exceed 20% of the total number of the issued shares (excluding treasury shares) of the Company;
Annual Report 2014
107
Notice of the Annual General Meeting
9.
Notice of the Annual General Meeting
(ii)subject to such manner of calculation as may be prescribed by the SGX-ST, for the
purpose of this Resolution, the percentage of the issued share capital shall be based
on the Company’s total number of the issued shares (excluding treasury shares, if any)
at the time this Resolution is passed, after adjusting for:
(a)new shares arising from the conversion or exercise of any convertible securities;
(b)new shares arising from exercise of share options or vesting of share awards outstanding or subsisting at the time of the passing of this Resolution, provided the
options or awards were granted in compliance with Part VIII of Chapter 8 of the
Listing Manual of the SGX-ST; and
(c)any subsequent bonus issue, consolidation or subdivision of shares;
(iii)in exercising the authority conferred by this Resolution, the Company shall comply
with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association
for the time being of the Company; and
(iv)unless revoked or varied by the Company in a general meeting, such authority shall
continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.
[Explanatory Note (v)]
Explanatory Notes:
(i) Resolution 3: Pursuant to Article 91 of the Company’s Articles of Association, Dr. Diao Weicheng will retire
at the forthcoming Annual General Meeting and shall be eligible to offer himself for re-election at that
meeting. If re-elected, he will remain as the Executive Chairman of the Board and a member of the
Nominating Committee.
THE PROPOSED RENEWAL OF THE interested person transactionS MANDATE
(Resolution 9)
THAT:
(i) approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual
(“Chapter 9”) of the SGX-ST, in particular for the purposes of Rule 920 of the Listing
Manual in relation to a general mandate from the Shareholders, for the Company,
its subsidiaries and associated companies that are entities at risk (as that term is used
in Chapter 9), or any of them, to enter into any of the transactions falling within the
types of interested person transactions described in the Appendix to this Annual
Report (“Appendix”) with the AVIC Group (as defined therein), provided that such
transactions are made on normal commercial terms and in accordance with the
review procedures for such interested person transactions as set out in the Appendix
(the “IPT Mandate”);
(v) Resolution 8: If passed, this Resolution will empower the Directors of the Company, effective until the
conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual
General Meeting of the Company is required by law to be held or such authority is varied or revoked by the
Company in a general meeting, whichever is the earlier, to issue shares, make or grant offers, agreements or
options (collectively, “Instruments”) convertible into shares and to issue shares pursuant to such Instruments,
up to a number not exceeding in total 50% of the issued share capital of the Company (excluding treasury
shares, if any), of which up to 20% may be issued other than on a pro-rata basis to shareholders.
(ii) the IPT Mandate shall, unless revoked or varied by the Company in a general
meeting, continue in force until the conclusion of the next Annual General Meeting
of the Company; and
(iii) the Audit Committee of the Company be and is hereby authorised to take such
action as it deems proper in respect of such procedures and/or modify or implement
such procedures as may be necessary to take into consideration any amendment to
Chapter 9 of the Listing Manual which may be prescribed from the SGX-ST from time
to time; and
(iv) the Directors of the Company and any of them be and are hereby authorised to
complete and do all such acts and things (including. without limitation, execution
all such documents as may be required) as they or he may consider expedient
or necessary or in the interests of the Company to give effect to the transactions
contemplated and/or authorised by the IPT Mandate and/or this Resolution.
(ii) Resolution 4: Pursuant to Article 91 of the Company’s Articles of Association, Ms. Alice Lai Kuen Kan will
retire at the forthcoming Annual General Meeting and shall be eligible to offer herself for re-election at
that meeting. If re-elected, she will remain as an Independent Director of the Company, the Chairman of
the Remuneration Committee, and a member of the Audit Committee and the Nominating Committee.
(iii) Resolution 5: Pursuant to Article 91 of the Company’s Articles of Association, Mr. Chong Teck Sin will retire
at the forthcoming Annual General Meeting and shall be eligible to offer himself for re-election at that
meeting. If re-elected, he will remain as an Independent Director of the Company, the Chairman of the
Audit Committee, and a member of the Remuneration Committee and the Nominating Committee
(iv) Resolution 6: Pursuant to Article 91 of the Company’s Articles of Association, Mr. Li Meijin will retire at the
forthcoming Annual General Meeting and shall be eligible to offer himself for re-election at that meeting.
If re-elected, he will remain as an Executive Director of the Company.
For determining the aggregate number of shares that may be issued, the total number of issued shares
will be calculated based on the total number of issued shares in the capital of the Company (excluding
treasury shares, if any) at the time this Resolution is passed, after adjusting for:
(a) new shares arising from the conversion or exercise of any convertible securities;
(b) new shares arising from the exercise of share options or vesting of share awards outstanding or subsisting
at the time of the passing of this Resolution, provided the options or awards were granted in compliance
with Part VIII of Chapter 8 of the Listing Manual of the SGX-ST; and
(c) any subsequent bonus issue, consolidation or subdivision of shares.
(vi) Resolution 9: Ordinary Resolution 9 is to approve the renewal of the IPT Mandate. At the annual general
meeting of the Company held on 29 April 2014, the shareholders of the Company approved and adopted
shareholders’ mandate for interested person transactions (“IPT Mandate”), details of which are set out in
the Circular dated 14 April 2014. The Company desires to renew such IPT Mandate at this upcoming Annual
General Meeting. Please refer to the Appendix to the Annual Report of the Company for the financial year
ended 31 December 2014 for more information on the renewal of the IPT Mandate .
[Explanatory Note (vi)]
10. To transact any other ordinary business that may properly be transacted at an Annual
General Meeting.
By Order of the Board
Yap Lian Seng
Company Secretary
Singapore, 14 April 2015
108
AVIC International Maritime Holdings Limited
Notes:
1. A member entitled to attend and vote at the Annual General Meeting may appoint not more than two proxies to
attend and vote on his behalf and where a member appoints more than one proxy, the proportion of the shareholding
concerned to be represented by each proxy shall be specified in the Member Proxy Form. A proxy need not be a
member of the Company. The instrument appointing a proxy must be deposited at the Company’s registered office at
10 Collyer Quay, #27-00 Ocean Financial Centre, Singapore 049315 not less than forty-eight (48) hours before the time
set for the holding of the Annual General Meeting.
2. If a member is unable to attend the Annual General Meeting and wishes to appoint a proxy to attend and vote at the
Annual General Meeting in his stead, then he should complete and sign the relevant Member Proxy Form and deposit
the duly completed Member Proxy Format Company’s registered office at 10 Collyer Quay, #27-00 Ocean Financial
Centre, Singapore 049315 not later than forty-eight (48) hours before the time set for the holding of the Annual General
Meeting.
Annual Report 2014
109
Notice of the Annual General Meeting
3. A Depositor whose name appears in the Depository Register (as defined in Section 130A of the Companies Act (Chapter
50) of Singapore) as at a time not earlier than forty-eight (48) hours prior to the time of the Annual General Meeting who/
which is (i) an individual but is unable to attend the Annual General Meeting personally and wishes to appoint a nominee
to attend and vote; or (ii) a corporation, must complete, sign and return the Depositor Proxy Form and deposit the duly
completed Depositor Proxy Form at Company’s registered office at 10 Collyer Quay, #27-00 Ocean Financial Centre,
Singapore 049315, at least forty-eight (48) hours before the time of the Annual General Meeting.
4. If a member who has Shares entered against his name in the Depository Register and Shares registered in his name in the
Register of Members of the Company is unable to attend the Annual General Meeting and wishes to appoint a proxy, he
should use the Depositor Proxy Form and the Member Proxy Form for, respectively, the Shares entered against his name
in the Depository Register and the Shares registered in his name in the Register of Members of the Company.
5. A Depositor who is an individual and whose name is shown in the Depository Register as at a time not earlier than fortyeight (48) hours prior to the time of the Annual General Meeting and who wishes to attend the Annual General Meeting
in person need not take any further action and can attend and vote at the Annual General Meeting as CDP’s proxy
without the lodgment of any proxy.
6. By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual
General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use
and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and
administration by the Company (or its agents) of proxies and representatives appointed for the Annual General Meeting
(including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other
documents relating to the Annual General Meeting (including any adjournment thereof), and in order for the Company
(or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”),
(ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to
the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s)
for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/
or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any
penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
AVIC INTERNATIONAL MARITIME HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)
(Registration No. 201024137N)
PROXY FORM – ANNUAL GENERAL MEETING
1. For investors who have used their CPF monies to buy shares in the
capital of AVIC INTERNATIONAL MARITIME HOLDINGS LIMITED, this report is
forwarded to them at the request of their CPF Approved Nominees and is
sent FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective
for all intents and purposes if used or purported to be used by them.
I/We*, ___________________________________________ (name) of ________________________________________ __
_________________________________________________________(address) being a member/members of AVIC
INTERNATIONAL MARITIME HOLDINGS LIMITED (the “Company”), hereby appoint :
Name
Address
NRIC/Passport No.
Address
NRIC/Passport No.
Proportion of Shareholdings
No. of Shares
%
and/or (delete as appropriate)
Name
Proportion of Shareholdings
No. of Shares
%
or failing *him/her, the Chairman of the Annual General Meeting, as *my/our *proxy/proxies to attend and to
vote for *me/us on *my/our behalf and, if necessary, to demand a poll at the Annual General Meeting of the
Company to be held at Millenia 4, 2nd Floor, The Ritz-Carlton, Millenia Singapore, 7 Raffles Avenue 039799 on
3pm on 29 April 2015 and at any adjournment thereof.
(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the
resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/
proxies will vote or abstain as *he/they may think fit, as he/they will on any other matter arising at the Annual
General Meeting)
ORDINARY BUSINESS
For
Against
Resolution 1 To receive and adopt the Audited Financial Statements of the
Company for the financial year ended 31 December 2014 (“FY2014”),
together with the Reports of the Directors and Auditors thereon.
Resolution 2 To approve the Directors’ Fees of S$280,000 for FY2014.
Resolution 3 To re-elect Dr Diao Weicheng, a Director who retires pursuant to Article
91 of the Company’s Articles of Association.
Resolution 4 To re-elect Ms Alice Lai Kuen Kan, a Director who retires pursuant to
Article 91 of the Company’s Articles of Association.
Resolution 5 To re-elect Mr Chong Teck Sin, a Director who retires pursuant to Article
91 of the Company’s Articles of Association.
Resolution 6 To re-elect Mr Li Meijin, a Director who retires pursuant to Article 91 of
the Company’s Articles of Association.
Resolution 7 To re-appoint Messrs Deloitte & Touche LLP as Auditors of the Company
and to authorise the Directors of the Company to fix their remuneration.
SPECIAL BUSINESS
Resolution 8 To approve and adopt the Share Issue Mandate.
Resolution 9 To approve the proposed renewal of the IPT Mandate
Date this _________ day of _________________ 2015
Total Number of Shares held in :
CDP Register
Register of Members
_____________________________________
Signature(s) of members(s) or Common Seal
* Delete where applicable
IMPORTANT: PLEASE READ THE NOTES OVERLEAF
110
AVIC International Maritime Holdings Limited
Annual Report 2014
111
Contact Us
NOTES :
1. Please insert the total number of Shares held by you. If you have shares entered against your name in the Depository
Register (as defined in Section 130A of the Singapore Companies Act, Cap. 50), you should insert that number
of shares. If you have shares registered in your name in the Register of Members of the Company, you should
insert that number of shares. If you have shares entered against your name in the Depository Register and shares
registered in your name in the Register of Members, you should insert the aggregate number of shares. If no number
is inserted, this form of proxy will be deemed to relate to all the shares held by you.
Singapore
Kaixin Industrial Pte. Ltd.
2. A member of the Company entitled to attend and vote at the Annual General Meeting of the Company is entitled to
appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company.
3. Where a member appoints more than one proxy, the member must specify the proportion of shareholdings (expressed
as a percentage of the whole) to be represented by each proxy. If no proportion of shareholdings is specified, the
proxy whose name appears first shall be deemed to carry 100 per cent of the shareholdings of his appointor and the
proxy whose name appears after shall be deemed to be appointed in the alternate.
China
AVIC Kaixin (Beijing) Ship
Industry Co., Ltd.
17th Floor, North Star Times
Tower, No. 8 Beichendong
Rd, Chaoyang District,
Beijing, China 100101
Fax: +86 10-8497 1533
AVIC International Offshore
(Xiamen) Co., Ltd.
E Unit,18th Floor, Hongxiang
Tel: +86 592-5186 100
Mansion, 258 Hubin South Rd,
Siming District, Xiamen, China Fax: +86 592-5186 177
361004
AVIC International Ship
Development (Guangzhou)
Co., Ltd.
Room 302, South Tower,
Baoli International Plaza,1
East Pazhou Avenue, Haizhu
District, Guangzhou, China
510308
Tel: +86 20-8989 9833
Finland
Deltamarin Ltd.
Postikatu 2, FI-20250 Turku,
Finland
Tel: +358 2 4336 300
Greece
Representative Office
16 Kaklamanou, n. kosmos,
Athens Greece 11745
Tel: +210 9211 130
Cabao
Warenhandelsgesellschaft
mbH, Grosse Bleichen 16,
Hamburg 20354
Tel: +40 2549 7727
8. The signature on the instrument appointing a proxy need not be witnessed. Where an instrument appointing a proxy
is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must
(failing previous registration with the Company) be lodged with the instrument appointing a proxy, failing which the
instrument may be treated as invalid.
General :
AVIC International Maritime Holdings Limited
Email: [email protected]
Tel: +86 21-5289 5588
7. If the appointor is a corporation, the instrument appointing a proxy shall be either given under its common seal or
signed on its behalf by an attorney or a duly authorised officer of the corporation. A corporation which is a member may
authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative
at the meeting, in accordance with Section 179 of the Companies Act, Cap. 50.
112
Fax: +65 6632 5698
27-28th Floor, CATIC Mansion,
212 Jiangning Rd, Shanghai,
China 200041
6. If the appointor is an individual, the instrument appointing a proxy shall be signed by the appointor or his attorney.
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General
Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure
of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by
the Company (or its agents) of proxies and representatives appointed for the Annual General Meeting (including any
adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating
to the Annual General Meeting (including any adjournment thereof), and in order for the Company (or its agents) to
comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants
that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company
(or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection,
use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for
the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims,
demands, losses and damages as a result of the member’s breach of warranty.
Tel: +65 6632 5688
AVIC International Ship
Development (China) Co.,
Ltd.
5. If the instrument appointing a proxy is returned without the name of the proxy indicated, the instrument appointing a
proxy shall be invalid.
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly
completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the
appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the
Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being
the appointor, is not shown to have shares entered against his name in the Depository Register as at forty-eight (48)
hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte)
Limited to the Company.
9 Raffles Place, #52-01
Republic Plaza, Singapore
048619
AVIC International Offshore
Pte. Ltd.
4. If the instrument appointing a proxy is returned without any indication as to how the proxy shall vote, the proxy shall
vote or abstain as he thinks fit.
9. The instrument appointing a proxy must be deposited at the Company’s registered office at 10 Collyer Quay, #27-00
Ocean Financial Centre, Singapore 049315, not less than forty-eight (48) hours before the time appointed for holding
of the Annual General Meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same
day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used.
AVIC International Maritime
Holdings Limited
Germany
Representative Office
Fax: +86 21-5289 5289/ 5166
Fax: +86 20-8989 9830
Email: [email protected]
Email: luobing1968@avicship.
com
Registration Number 201024137N
AVIC International Maritime Holdings Limited
9 Raffles Place, #52-01 Republic Plaza, Singapore 048619
Tel: +65 6632 5688 Fax: +65 6632 5698
www.avicintl.com.sg